Mumbai: The rupee bounced off six-week lows on Wednesday after two large companies sold dollars, with sentiment also supported by early gains in domestic shares and other Asian peers.
By 10:10 am, the partially convertible rupee was at 47.27/28 per dollar, stronger than 47.35/36 at close Tuesday when it had hit 47.3850 during trade, its lowest since 7 June.
“The rupee has edged up a bit today due to some corporates selling dollars raised via qualified institutional placements,” said Nitesh Kumar, an interbank dealer with Development Credit Bank.
“But it looks weak. I see the INR going down to 47.50 by Friday.”
Indian shares rose 0.4% early tracking stronger regional sharemarkets and overnight gains in US stocks.
Foreign fund flows into and out of the sharemarket are a key factor that influence the rupee. So far in 2010, foreign investors have invested a net $8.7 billion in Indian shares, adding to last year’s record $17.5 billion.
Finance minister Pranab Mukherjee said on Tuesday the quantum of capital flows into the country is comfortable and manageable.
Most Asian currencies also rose against the dollar. The index of the dollar against six major currencies was little changed and would be watched for cues during the day, dealers said.
The euro inched up against the dollar on Wednesday, after being knocked from a 10-week high above $1.3000 the previous day due to profit-taking ahead of euro zone bank stress test results this week.
One-month offshore non-deliverable forward contracts were quoted at 47.50, weaker than the onshore spot rate, suggesting a bearish near-term outlook.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX were both at 47.3250, with the total traded volume on the two exchanges at about $770 million.