Mumbai: The rupee recouped early losses on Wednesday as dollar selling and a mild recovery in the stock market offered some support, although worries about high oil prices were containing gains.
At 10:10 am, the partially convertible rupee was at 40.275/285 per dollar, off an early low of 40.36 and stronger than Tuesday’s close of 40.31/32.
“The central bank is selling dollars in short-term rupee-dollar swaps. The (dollar) supplies would come in the next day or two. This has improved sentiment slightly,” a senior trader with a private bank said.
“This has encouraged a few exporters to sell dollars,” he added.
The trader said the central bank was doing the currency swaps with state-run banks to help the market tide over a dollar shortage, mainly caused by the recent fall in local stocks.
India’s main share index was higher in early deals on Wednesday, having fallen more than 8% over the previous four days.
Foreign funds sold local shares worth $169.4 million on Monday, when stocks had plunged more than 5%, data showed. Foreigners have been net sellers of $3.2 billion worth of equities so far in 2008.
Traders said there was some caution about oil, which had eased back under $100 a barrel after hitting a record of almost $104 per barrel on Monday. An OPEC meeting in Vienna on Wednesday is expected to leave output unchanged.
Crude is India’s biggest import and a high oil prices raise the risk of widening the country’s trade deficit, which would put pressure on the rupee.