Mumbai: The rupee surged further in limited activity and ended moderately higher at 40.7450/7550 against the US currency on 12 June, mainly buoyed by fresh FII inflows into equity market amid dollar buying by banks.
State-owned banks were believed to be making purchases in the greenback on behalf of the Reserve Bank of India (RBI), which attempted to offset the impact of capital inflows through the IPO route.
As per data available, the institutional portion of the real estate major DLF Ltd’s mega public issue, which opened on 11 June, was fully subscribed on the opening day of the IPO.
In active trade at the Interbank Foreign Exchange (forex) market, the local currency fluctuated in a range of 40.64 and 40.80 during the day after resuming firm at 40.73/75 a dollar from yesterday’s close of 40.79/80 a dollar.
The rupee gains were capped by suspected RBI intervention through public sector banks, forex dealers said adding: “Banks were seen making dollar buying as the Indian unit continued to draw support from capital inflows.”
The inflows are expected to reach a record high of over $15 billion in the current calendar year due to a line-up of multi-billion-dollar share offerings.
After DLF Ltd’s IPO, India’s largest private sector bank ICICI Bank has also proposed to raise sizeable chunk of funds through public issue in the month.
Meanwhile, the RBI fixed the reference rate for the US currency at Rs40.73 a dollar and for the single European unit at Rs54.44 per Euro.
In cross currency trades, the rupee weakened marginally against the British Sterling but improved further against the Euro and the Japanese Yen.
The Indian unit fell back against the Sterling to 80.36/38 per pound from the previous close of 80.21/23 but advanced further against the single European currency to 54.36/38 against previous close of 54.44/46 per Euro.
The rupee also firmed up against the Japanese unit and closed at 33.45/47 per 100 Yen from last close of 33.51/53.