Rupee hits 16-month high at 65.36

After a consolidation phase, the rupee ended on a new 16-month high at 65.36 against the American currency in the face of dollar unwinding from exporters and banks.

Weak dollar overseas along with abundant capital inflows supplemented further strength to the local currency.

Forex dealers pointed to the recent improvement in sentiment as the impetus for the renewed vigour.

Massive capital inflows on hopes of more reform measures following BJP's strong showing in the recently held state elections spurred the rupee's biggest rally last week since early 2015.

Robust domestic macro fundamentals including 7 per cent GDP growth and a rebound in industrial production along with lesser-than-anticipated hawkish monetary policy stance too reflected in the strong rallying momentum.

The much-anticipated turnaround on the economic front has opened up a barrage of foreign capital fund flows into India.

Foreign investors pumped in USD 3.4 billion in the capital markets so far this month, while country's foreign exchange reserves nudged up USD 98.6 million in the week ended March 10.