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Business News/ Money / Personal-finance/  Rupee off lows on Power Grid share sale inflows
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Rupee off lows on Power Grid share sale inflows

Rupee off lows on Power Grid share sale inflows

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Mumbai: The rupee fluctuated on Wednesday as a strong dollar overseas and choppy domestic shares offset large dollar inflows entering the country for Power Grid Corp’s ongoing $1.7 billion share sale.

The partially convertible rupee closed at 44.30/31 per dollar, little changed from 44.31/32 at close on Tuesday. The unit traded in a range of 44.26-44.45 during the session.

“Euro started coming off sharply from the day’s highs in late India trade, which pulled the rupee off its highs too," said A. Ajith Kumar, a foreign exchange dealer with Federal Bank.

The euro was trading at $1.3766 when the rupee market closed, off the day’s high of $1.3826. The dollar’s index against six majors was also up 0.4%.

“The China reserve requirement hike is not good for the rupee. We can expect shares to fall tomorrow and see some dollar buying globally," said Ashtosh Raina, head of foreign exchange trading at HDFC Bank.

China’s central bank on Wednesday said it was raising lenders’ required reserve ratio by 50 basis points, effective 16 November, its fourth official increase this year.

The announcement followed a report by Reuters earlier in the day that the central bank had raised reserve requirements for a select number of major banks.

“Rupee gained mostly because of the dollar inflows for the Power Grid issue, but most inflows have come in by now. Leftovers could come until tomorrow noon at the latest. I expect the pair to hold in 44.25-44.45 band tomorrow," Raina said.

Power Grid Corp of India, the world’s third-largest power transmission company, on Tuesday launched a share sale to raise up to $1.7 billion before it closes on Friday. The sale was fully covered on its first day.

Traders expect inflows towards the share sale to limit the rupee’s downside at around 44.50 in the near term.

Mild losses in shares also weighed as that failed to provide clarity on the direction of foreign fund flows, which have a large influence on the rupee’s fortunes. So far this year, foreigners have bought shares worth a record $28.3 billion.

One-month offshore non-deliverable forward contracts were at 44.62, weaker than the onshore spot rate.

In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange, MCX-SX and United Stock Exchange closed at 44.51, 44.5075 and 44.5050 respectively, with the total traded volume on the three exchanges at about a low $5.8 billion.

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Published: 10 Nov 2010, 05:21 PM IST
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