The rupee recouped from its steep early lows to close the day at 50.28/29 against the dollar amidst reports of Reserve Bank’s intervention in the forex market.
At the Interbank Foreign Exchange (Forex) market, the domestic currency opened sharply lower at 50.55/56 a dollar from previous close of 50.36/37 and immediately touched its nearly 7-week low of 50.76, last seen in January.
According to some dealers, RBI might have intervened in the forex market at the rupee’s low level, helping it to bounce back sharply.
The domestic currency on Tuesday had slumped to six-week low of 50.39 on hefty demand for the US dollar.
“The rupee closed grossly strong. The local unit opened weak and swiftly depreciated to 50.76 levels. The bulk of movement happened yesterday on account of dollar buying for advance payments to be made to Dassault for manufacturing Rafael fighter jets,” Abhishek Goenka, CEO, India Forex Advisors, said.
A USD 12 billion contract was recently inked between Ministry of Defence and Franch company Dassault for providing a total of 108 Rafael fighters of which 18 is to be delivered in 2012.
The rupee fell to seven-week low levels intra-day but recouped losses to end the day eight paise higher at 50.28/29 against the American currency.
Forex dealers said the rupee recovered from its early losses on sudden emergence of fresh dollar selling by exporters and banks. The domestic currency shrugged off the see-saw trade in stocks.
They also said that the rupee sentiment was aided by weakness in overseas dollars.
At the Interbank Foreign Exchange (Forex) market, the domestic currency opened sharply lower at 50.55/56 a dollar from previous close of 50.36/37 and immediately touched its nearly 7-week low of 50.76, last seen in mid-January.
Dealers attributed early fall in rupee to sluggish local stocks and heavy dollar demand from importers, mainly oil refiners, as New york crude oil was still trading higher above USD 105 a barrel in Europe on Wednesday.
In the last straight four sessions, it had plunged by 127 paise or 2.59 per cent.
Meanwhile, the BSE Sensex, which was down by over 164 points in late afternoon, recovered at the fag end but still closed lower by almost 28 points or 0.16 pct.
FII sold shares worth USD 34.27 million on Tuesday, as per SEBI data.
The dollar index was down by 0.1 per cent against a basket of currencies in Europe on Wednesday.