Rupee is at an eleven-month high; RBI keeping an eye

The rupee has reached an eleven-month high, gaining strength significantly to the dollar. The reason could be cited as BJP's resounding victory in recently held state elections, which has revitalized overseas investors’ hopes for fast-paced economic reforms, leading to cash inflow of investments.

Also read: The rupee is climbing after India's central bank unexpectedly holds rates

As per reports, rupee has hit nearly 11-month high rising 66.18 against the green back; the level was last seen eleven months ago on April 21, 2016.

This has led the Reserve Bank of India to pull up its socks, keeping a check on the market through state-owned banks that have bought dollars.

Also read: Is RBI regretting demonetisation?

"Overseas inflows are primarily driving the rupee now," Anindya Banerjee, currency analyst at Kotak Securities, told ET. "State elections have clearly fueled bullish investor sentiment, which in turn, is adding to the rupee's rise. With an active currency market, arbitrage opportunities too have expanded."

The state election results have clearly come as a promotion for Prime Minister Narendra Modi, who had to face criticism after his demonetisation drive.

Also read: Here’s everything you need to know about election results

Now, after his landslide victory in the state elections, Modi is rumoured to set off quick economic reforms.

(Image source: India.com)