Rupee rises by 11 paise to over 2-month high on weak dollar

March 23, 2011 07:47 pm | Updated 07:47 pm IST - Mumbai

The rupee on Wednesday gained 11 paise to close at over two-and-a-half-month high of 44.85/86 against the U.S. currency, largely driven by a smart rally in local equities amid expectations of increase in capital inflows.

Relentless dollar selling by exporters and some banks also helped the rupee rise.

“Rupee traded positively throughout the day, on positives in the stock market which offshoot negatives from the weaker Regional peers and euro that fell from its more than four months high against dollar, on the impending crisis in Portugal,” Alpari Forex (India) CEO Pramit Brahmbhatt said.

“The trading range for the USD/INR will be between 44.65—45.15 tomorrow,” he added.

In an active trade at the Interbank Foreign Exchange (Forex) market, the local currency opened weak at 45.02/03 a dollar from yesterday’s close of 44.96/9650 due to initial fall in the stocks.

However, smart rebound in equities coupled with dollar selling by exporters and some banks boosted the rupee sentiment and it rose to a high of 44.83 before concluding at 44.85/86, the level not seen since January 3, 2011.

The Indian benchmark Sensex closed up by about 218 points or 1.21 per cent, to close at 18,206.16, which might bring more capital inflows.

Foreign Institutional Investors (FIIs), after pulling out USD 232.97 million in four sessions since March 16, pumped in USD 69.67 crore on March 23.

The dollar index, which was down initially, recovered and was quoted up by 0.05 per cent against six major currencies as the euro fell down due to keeping rates on hold this month by the Bank of England’s Monetary Policy Committee today.

Meanwhile, U.S. crude futures were trading higher at near USD 105 a barrel in London today but failed to halt the rupee rally as oil refiners kept themselves aside from buying dollars, expecting it to fall in near term.

The rupee premium for the forward dollar rose on fresh paying pressure from banks and corporates. The benchmark six—month forward dollar premium payable in August finished up at 140—142 paise from 138—139—1/2 paise yesterday.

Far—forward contracts maturing in February also closed higher at 280—282 paise from 275—276—1/2 paise on Tuesday.

The Reserve Bank of India has fixed the reference rate for the dollar at Rs. 44.96 and the euro at Rs. 63.68.

The rupee recovered smartly to Rs. 73.01/02 against the pound sterling from Tuesday’s close of Rs. 73.69/71 and also bounced back against the euro to Rs. 63.49/51 from Rs. 64.02/04 previously.

It edged up against the yen to Rs. 55.44/46 per 100 yen from last close of Rs. 55.47/49.

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