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Rupee bounces back against dollar

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MUMBAI: The rupee bounced back smartly against the U.S. currency on Tuesday after strong portfolio inflows and a global weak dollar drove it to a 11-week high of 44.90/91 a dollar even as heavy dollar demand from oil companies limited gains to post a closing quote of Rs. 45.0375/0475.

Rallying by nearly four paise from Monday's finish of Rs. 45.08/09, sentiment turned upbeat at the interbank foreign exchange market following renewed robust foreign institutional investor inflows into the booming equity markets on the back of a retreating dollar overseas, dealers said.

Rising crude oil prices, however, fuelled hectic dollar demand from oil companies, reducing sharp gains, they added.

The rupee declined by five paise on Monday.

The domestic currency last breached the 45-dollar level and ended at Rs. 44.88/89 on October 17, 2005.

The FIIs infused a huge $104.5 million into equity markets on January 2 after a massive $115.2 million on the last trading day of 2005.

Although, rising crude oil prices and a burgeoning current account trade deficit weighed on rupee value, the currency could take comfort from sustained FII inflows and a broader weak dollar, bankers said.

The Reserve Bank of India fixed the reference rate for the U.S. currency at Rs. 44.95 and for the single European unit at Rs. 53.46. - PTI

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