Rupee snaps two weeks of gains against dollar, ends 3 paise down

Snapping its two-week-long gaining spree the rupee ended lower by three paise at 44.70/71 against the U.S. currency on mild dollar demand from banks and importers on the back of a firm dollar overseas.

The rupee lost ground in the later part of the trade, which saw some buying from importers, dealers said.

Moreover, choppy equity markets weighed heavy on the Indian currency, they added.

The Bombay Stock Exchange dropped 101 points to 18,394.29 as blue-chip stocks RIL and ONGC came under selling pressure amid uncertainty over fuel price hike, and weak global cues.

The Euro too gave away its gains in the afternoon trades resulting in the pullback in dollar index which was weighed down yesterday by comments of Federal Reserve Chairman Ben Bernanke that bolstered expectations for the US interest rates to stay low for now.

In London, the dollar regained some ground versus major rivals today, a move tied in part to reduced appetite for risk in the wake of a speech by Federal Reserve Chairman Ben Bernanke that offered no sign a further round of quantitative easing is in the works, strategists said.

Meanwhile, global crude oil was trading above USD 98 a barrel in London.

Alpari India CEO Pramit Brahmbhatt said rupee traded volatile throughout the day in a very thin range as the beginning of the session showed good strength in the rupee as it made a low of 44.74 levels and touched its 1 month high.

The rupee resumed lower at Rs 44.72/73 per dollar as against the overnight closing level of Rs. 44.67/68 per dollar on good demand for dollars from banks and importers amidst firm dollar in overseas market.

However, it recovered afterwards to a one-month high of Rs. 44.58 on selling of dollars by some banks and exporters, before ending the day at 44.70/71 per dollar after moving in a range of 44.58 per dollar and 44.75 per dollar during the day.

The rupee premium for the forward dollar finished sharply lower on sustained receivings by exporters. The benchmark six-month forward dollar premium payable in November ended down 128-130 paise from 138-140 paise.

Far-forward contracts maturing in May also too closed sharply lower at 240-242 paise from 265-267 paise previously.

The RBI has fixed the reference rate for the dollar at Rs. 44.61 and the euro at Rs. 65.47.

The rupee moved up further against the pound sterling to end at 73.21/23 from Tuesday’s close of Rs. 73.30/32 and also recovered to Rs. 65.42/44 per euro from Rs. 65.49/51 previously.

It, however, fell back against the Japanese yen to Rs. 56.04/08 per 100 yen from Rs. 55.70/72 previously.