Mumbai: The Indian rupee posted its biggest single-day gain in two months on Wednesday tracking a sharp rebound in the euro, while dollar sales by exporters and a couple of large corporates also helped.
The partially convertible rupee closed at rS 45.37/38 per dollar, after hitting 45.3350, its highest since 22 November. The unit closed at Rs 45.88/89 on Tuesday, when it had dipped to Rs 46.12, its weakest since 17 September.
On the day, the rupee rose 1.1%, its biggest single-day rise since 1 October.
“Positive equities and a pull-back in the euro helped the rupee. Exporters too sold dollars, there were also two large corporates selling,” said Vikas Chittiprolu, a senior foreign exchange dealer with state-run Andhra Bank in Mumbai.
The euro rose on Wednesday as a three-day selling spree lost steam, but doubts about whether the euro zone can contain debt problems facing some states kept the single currency in range of a 2-“ month low versus the dollar.
The dollar index, its measure against a basket of six major currencies, was down 0.5% at 80.784 points when the rupee market closed.
“There was a lot of selling in the market towards close, as the market was stuck long dollar. So most were stopping out,” said Ashtosh Raina, head of foreign exchange trading at HDFC Bank.
“What happens tomorrow will depend on the balance initial public offering flows. 45.20 is the next support for the dollar”.
Manganese Ore India, a Nagpur-based firm, the largest producer of manganese ore in India, is planning to raise up to $276 million through an initial public offering closing on Wednesday.
State-run Shipping Corporation of India is likely to raise up to $259 million through a share sale. The issue opened on Tuesday and will close on Friday.
Traders said the sentiment was generally very upbeat due to the stronger-than-expected growth recorded in the September quarter with positive domestic shares also cheering.
India’s economy grew more than expected in the second quarter of 2010/11, boosted by farm output and manufacturing, putting pressure on the Reserve Bank of India to tighten monetary policy although a rate increase next month looks unlikely.
Shares rose 1.7% on Wednesday to their best close in nearly two weeks as hopes of strong economic and corporate earnings growth triggered bargain hunting, after the market had fallen 2.6% in November.
Dealers said a large telecom firm was also expected to bring in $500 million towards tax payment over a period of time, which could help the rupee.
The one-year onshore dollar premium rose to 210 points from Tuesday’s close of 204 points.
One-month offshore non-deliverable forward contracts were at 45.61, weaker than the onshore spot rate, suggesting a bearish near-term outlook.
In the currency futures market, the most traded near-month dollar-rupee contract on the National Stock Exchange, MCX-SX and United Stock Exchange closed at 45.6175, 45.62 and 45.62 respectively, with the total traded volume on the three exchanges at an average $6.5 billion.