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Rupee gains on firm shares; inflation awaited

Rupee gains on firm shares; inflation awaited
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First Published: Mon, Feb 14 2011. 12 38 PM IST
Updated: Mon, Feb 14 2011. 12 38 PM IST
Mumbai: The rupee strengthened on Monday as a more than 1% rise in domestic shares calmed jittery nerves about capital outflows, while gains in other regional peers also helped sentiment.
By 9:45am, the partially convertible rupee was at Rs 45.55/56 per dollar, 0.3% stronger than Rs 45.68/69 at Friday’s close. Last week, the rupee had shed 0.2%.
“We are seeing a lot of dollar selling today tracking gains in the equity market. A lot of players who were long dollars are now cutting those positions,” said Rohan Naik, head of foreign exchange trading at Standard Chartered Bank in Mumbai.
“Today’s range should be around 45.50-45.70,” he added.
Indian shares gained more than 1% in early trade, with financials leading the rise, taking cues from strong Asian markets.
Foreign funds have been net sellers of $1.7 billion worth of shares so far this year, after purchasing a record $29.3 billion in 2010.
Traders said the market would be watching January inflation data due around noon as it is likely to have some impact on the sharemarket.
A Reuters poll predicted the wholesale price inflation to ease only slightly to 8.05% in January from 8.43% in December as commodity and fuel prices remain high.
The index of the dollar against six major currencies was down 0.1% at 78.405 points. Almost all Asian currencies rose on the dollar.
The euro teetered at a key technical level against the dollar on Monday, with a break of that support seen likely to deepen its decline as markets turn cautious ahead of a slew of events this week.
One-month offshore non-deliverable forward contracts were quoted at 45.78, 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 all at 45.6550. Total traded volume was at about $520 million.
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First Published: Mon, Feb 14 2011. 12 38 PM IST
More Topics: Markets | India | Rupee | Currency | Foreign Exchange |