Mumbai: The rupee erased intraday losses on Tuesday as shares reversed early falls to touch a two-and-half year closing high and the euro pared losses after a smooth Greek treasury bill auction.
The partially convertible rupee ended at 46.7650/7750 per dollar, steady from Monday’s closing of 46.77/78 per dollar, but stronger from an intraday low of 46.95.
“Sentiment clearly turned upbeat after stocks recovered. Tomorrow’s movement will be mostly driven by the dollar’s moves against other currencies like the euro and pound,” said a senior dealer with a private bank in Mumbai.
The BSE benchmark Sensex rose 0.3% to its best close in nearly two-and-half months as higher European markets offset a disappointing quarterly earnings by IT bellwether Infosys Technologies.
Foreign fund flows into and out of the share market have a key influence on the rupee. So far in 2010, foreign investors have purchased shares more than $8 billion, in addition to last year’s record $17.5 billion inflow.
The euro’s recovery also supported sentiment, traders said. The euro pared losses on Tuesday after a smooth Greek treasury bill auction offset the negative impact of a ratings downgrade on Portugal.
The dollar index, a key indicator of the US currency’s strength versus major currencies, was down about 0.1% at the time of the local market’s close.
One-month offshore non-deliverable forward contracts were quoted at 46.93, weaker than the onshore spot rate.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX ended at 46.8850 and 46.8825 respectively, with the total traded volume on the two exchanges at about $3.4 billion.