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Rupee recovers on strong dollar inflows; weak euro drags

Rupee recovers on strong dollar inflows; weak euro drags
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First Published: Tue, Jul 05 2011. 05 48 PM IST
Updated: Tue, Jul 05 2011. 05 48 PM IST
Mumbai: The rupee regained lost ground in a choppy session on Tuesday, propelled by strong foreign fund inflows, but a softer euro and weak Asian currencies hampered further rise.
The partially convertible rupee ended at Rs 44.4250/4350 per dollar, unchanged from Monday’s close, but stronger than the day’s low of Rs 44.5350. Intra-day, the local unit had hit a high of 44.3800.
“We had heard about (dollar) outflow in the morning, but there has been a good amount of (dollar) selling from foreign institutional investors,” said Rohan Naik, head of foreign exchange trading at Standard Chartered Bank in Mumbai.
“And if this momentum continues...we could see rupee at 44.20 soon.”
Traders said dollar demand from oil companies could cut short the rupee’s rise to around 44.20.
India imports over 80% of its crude oil needs and domestic oil refiners are the largest buyers of dollars in the local forex market.
Foreign funds have bought over $1 billion of local equities since June, after having dumped over $1.16 billion in domestic shares in May.
Indian shares slipped 0.4% on Tuesday as investors locked in gains after a revival of foreign interest triggered the recent sharp rally, while views the rise could have been overdone kept the near-term outlook uncertain.
The euro was at $1.4469 versus $1.4514 at the close of local forex trade on Monday, while the index of the dollar against six major currencies was up 0.32% at 74.509 points from its previous close of 74.308.
The euro fell against the dollar and the Swiss franc on Tuesday as deteriorating euro zone data and concerns over the health of the Chinese economy pushed investors away from riskier currencies back towards those perceived to offer safety.
The one-month onshore forward premium was at 25.25 points from 27 at last close, the three-month was at 75.75 points from 77.25, and the one-year was at 258 points from 260.
One-month offshore non-deliverable forward contracts were quoted at 44.58, weaker than the onshore spot rate.
In the currency futures market , the most traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were at 44.6125, 44.6100 and 44.6175 respectively. The total volume was at $8.87 billion.
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First Published: Tue, Jul 05 2011. 05 48 PM IST
More Topics: Markets | Rupee | Currency | Asia | BSE |