Mumbai: The rupee trimmed gains on Monday after climbing to a two-week high, as the dollar’s rise against major currencies and import payments dampened early euphoria sparked by a strong stocks rally.
The partially convertible rupee closed at Rs49.91/92 per dollar, 0.3% stronger than its previous close of Rs50.04/05.
“The rupee was not really tracking the domestic stocks or the offshore markets in late session, it was only following the dollar index. But gains in shares did help initially,” the chief dealer with a large private sector bank said.
The dollar index, a gauge of the US unit’s performance against six major currencies, was up 0.3% after having dropped over 0.4% earlier in the session.
The rupee initially strengthened to Rs49.55, its strongest since 16 April, with the stock market providing the thrust as the market reopened after a four-day weekend break.
The main stock index rose 6.4%, its biggest one-day gain in six months, as a survey showed April factory output grew while confidence the global economy was healing fed investor appetite for risk across Asia.
The rupee has been mirroring the stock market in recent weeks, and a 51% surge in local shares from their early March low, has helped the rupee rise 4.6% from its record trough of 52.2 on 3 March.
Foreign investors bought $1.5 billion worth of local shares in April, and helped notch net inflows of $126 million in 2009 after heavy outflows in January and February, data from the market regulator showed.
One-month offshore non-deliverable forward contracts were quoting at 49.96/50.06, weaker than the onshore spot rate.