Mumbai: The rupee climbed on Monday after briefly hitting a 10-day low, supported by firmer stocks and the absence of cash dollar demand following a holiday in the United States.
The partially convertible rupee ended at 45.64/65 per dollar after touching 45.84, its lowest since 8 January, and firmer than 45.78/79 on Friday.
“Since New York market was closed today there was no cash dollar demand. Also, the stock markets were up today,” said RK Gurumurthy, head of treasury at ING Vysya Bank.
The BSE benchmark Sensex gained 0.5%, powered by financial stocks after robust quarterly results.
Foreign investors have bought about $1.6 billion worth of local stocks this month and a rising local sharemarket boosts hopes for more capital inflows, which are a key support for the rupee.
The rupee had strengthened to 45.5450 in early trade, before falling to the 10-day low and then pulling back again.
Gurumurthy said the rupee reversed some early gains as oil refiners bought dollars, apart from some profit-taking.
Dealers said the rupee could rise on Tuesday.
“I expect it to open at same levels tomorrow and remain strong. If oil prices fall to $75-$76 level, it may add to the rupee’s strength,” said a dealer at a private sector bank.
US crude for February delivery was up 46 cents at $78.46 a barrel by 1334 GMT on Monday, after touching a three-week intraday low of $77.07.
“There will also be no pipeline dollar supplies tomorrow as New York was closed today. I expect rupee to open around 45.63/66 level. But it also depends upon Asian and far east Asian markets,” said Gurumurthy.
“It is a buy-on-dip rather than a sell-on-rise market now,” said another dealer at a foreign bank.
Gurumurthy expects exporters’ buying interest to come at around 46 levels. One-month offshore non-deliverable forward contracts were quoted at 45.625/645 per dollar, close to the onshore spot rate.
In the currency futures market, the most traded near-month contracts on the National Stock Exchange closed at 45.6825 and MCX-SX ended at 45.6600.
Total volume traded in both the exchanges in the futures market was moderate at $6.24 billion.