Mumbai: The Indian rupee gave up gains of over 1% in afternoon trade on Tuesday as choppy shares failed to provide clarity on direction of fund flows, with likely central bank intervention also adding to the pressure.
At 2:43pm, the partially convertible rupee was at Rs47.91/92 per dollar, marginally weaker than its Monday’s close of Rs47.88/90.
It rose as high as Rs47.27 in early trade, its strongest since 19 December, at which point it was up 10.4% from its record low of 52.2 in early March.
The rupee had surged 3.2% on Monday, its biggest single-day rise since 19 January, 1998, after the ruling coalition won a comfortable victory in national elections, boosting hopes for speedier economic reforms and higher foreign investment.
The main stock index trimmed gains to be up about 0.7% after rising over 4% earlier in volatile trade after the euphoria caused by the election win, which had sent the shares surging 17.3 % on Monday.
Dealers said the state-run banks were seen buying dollars likely on behalf of the central bank, to prevent a sharp rise in the rupee.
Prime Minister Manmohan Singh’s Congress-led coalition eyed possible new allies and needed just 10 seats for a parliamentary majority, rare in a country used to unwieldy coalitions.
In the currency futures market, the most traded near-month contract on the National Stock Exchange and MCX-SX were quoting at Rs47.85 and Rs47.8425 respectively, with the total traded volume on the two exchanges at about $1.5 billion.