Rupee breaks free, runs up 69 paise on Moody's India upgrade

The rupee today appreciated a sharp 69 paise, or 1.06 percent, to trade at an over one-week high of 64.63 against the dollar after the US-based rating agency Moody's upgraded India's sovereign credit rating.

The rally was supported by the dollar selling by exporters and banks and the US unit's weakness against some currencies overseas, traders said. They said a spectacular opening in the equity market did its job. US-based Moody's today upgraded India's sovereign credit rating by a notch to 'Baa2' with a stable outlook citing improved growth prospects driven by economic and institutional reforms.

The rating upgrade comes after a gap of 13 years -- Moody's had last upgraded India's rating to 'Baa3' in 2004.

In 2015, the rating outlook was changed to 'positive' from 'stable'. The rupee had yesterday dropped by 11 paise to close at 65.32 against the US currency on fresh dollar demand from importers and banks after the US data raised prospects of a rate hike by the Federal Reserve by the year-end that can trigger the flight of foreign capital.

Meanwhile, the BSE benchmark Sensex soared 414 points, or 1.25 percent, to 33,520.82 in opening trade today.