Rupee scales new peak

MUMBAI NOV. 7. The rupee shot up against the U.S. currency and scaled a new 9-1/2-month closing peak at 48.28/29 a dollar today, backed by strong dollar supplies from exporters and inward remittances in fairly volatile trading at the interbank foreign exchange market.

Overcoming early pressures, the rupee rallied smartly to post a fresh five paise gain from 48.3275/3325 after dollar supplies flooded the market in the afternoon, dealers said.

The rupee, however, opened on a weak note at 48.3350/3450 in anticipation of corporate dollar demand after the U.S. Federal Reserve resorted to an unexpected large 50 basis point cut in interest rates.

The domestic unit had last closed at 48.27/28 a dollar on January 22 and ended at 48.2650/2750 on January 23.

"Initially, banks went long on the dollar, expecting some corporate demand, but after heavy dollar supplies hit the market, the rupee rebounded and strengthened further," a dealer said, adding "Dollar supplies far outstripped the limited demand". A weak dollar against most major currencies also benefited the rupee.

Surplus export receivables and non-resident Indian remittances amidst negligible corporate and import demand were the main factors behind the solid strength of the rupee, bankers said.

Traders expect the rupee to consolidate further tomorrow on the back of sustained healthy flow of dollars, but dollar demand from state-run banks may prevent any sharp rise.

The Reserve Bank of India maintained the reference rate for the U.S. currency at Rs. 48.32 and fixed the single European unit at Rs. 48.54.

In cross currency deals, the rupee weakened against both Euro and the British pound sterling in a direct reflection to the dollar's decline against these units in overseas trading.

The futures market was also volatile and forward dollar premiums ended lower on renewed receiving interest after attracting early paying pressure following overnight 50 basis points rate cut by the Fed. — PTI

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