Mumbai: The rupee strengthened to a near 19-month high on Monday, as the dollar’s weakness overseas triggered selling in the US currency by exporters and firmer share prices underpinned sentiment.
The partially convertible rupee ended at 44.9575/9675 per dollar, after hitting 44.9450, its strongest since 10 September 2008 and 0.6% stronger than its close of 45.23/24 on Friday.
“Mostly, there was a lot of dollar selling from exporters at 45 a dollar level, which helped the rupee,” said a senior dealer with a foreign bank, who sees the Indian currency trading in a range of 44.90 to 45.15 on Tuesday.
“I see the rupee opening above 45 because many oil refiners will buy dollars,” he said.
Oil is India’s biggest import and refiners are the largest buyers of dollars in the domestic currency market. Demand for dollars tends to peak at the end of each month when refiners make payments for their imports.
The euro had risen against the dollar on Monday after euro zone leaders agreed on a financial safety net for Greece late last week. The dollar index against six majors was down about 0.5%.
A rise in local stocks also boosted the rupee. The BSE benchmark Sensex touched a 25-month high before ending 0.4% up on optimism about corporate earnings and stronger global equities.
Foreign fund flows in to and out of the sharemarket provide direction to the rupee. Foreigners have so far in 2010 bought shares worth a net $3.7 billion rupees, adding to net inflows of a record $17.5 billion last year.
One-month offshore non-deliverable forward contracts were quoting at 45.0, weaker than the onshore spot rate.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX both ended at 45.08.