Reversing its two-day downward trend, the rupee recovered by 5 paise to 67.21 against the US dollar in early trade on Wednesday at the Interbank Foreign Exchange market on selling of the American currency by exporters and banks.
Trading sentiments also got a boost after macro-economic indicators such as GDP numbers and core sector growth showed that the country’s economy has gained momentum.
India’s GDP grew 7.9 per cent in the January-March quarter of 2015-16, taking the overall economic growth to a five-year high of 7.6 per cent for the entire fiscal, mainly on account of good performance of manufacturing and farm sectors.
Core infrastructure sectors also grew at an over four-year high rate of 8.5 per cent in April, helped by double-digit expansion in refinery products and electricity generation.
Forex dealers said weakness in dollar against some other currencies overseas and a higher opening in the domestic equity market also supported the rupee.
The rupee had lost 10 paise against the US dollar to settle at 67.26 a dollar in yesterday’s trade due to sustained demand for the American currency from banks and importers.
The benchmark BSE Sensex recovered by 62.19 points, or 0.23 per cent, to 26,730.15 in early trade on Wednesday.