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Rupee ends flat as month-end dollar demand weighs

Rupee ends flat as month-end dollar demand weighs
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First Published: Mon, Aug 24 2009. 05 34 PM IST
Updated: Mon, Aug 24 2009. 05 34 PM IST
Mumbai: The Indian rupee gave up early gains to close flat on Monday as month-end dollar demand from importers and oil firms weighed, but a sharp rise in the sharemarket put a floor under the losses.
The partially convertible rupee closed at Rs48.62/63 per dollar, off an early high of Rs48.3850, to be unchanged from Friday’s close.
“Rupee opened with a large gap today, which triggered month-end oil-related dollar buying. Dollar selling was there in the market, but not too aggressive,” said Puneet Sharma, chief foreign exchange trader at state-run Allahabank Bank.
“The Sensex (share index) is unlikely to rally far ahead from current levels, it may go down or possibly consolidate around these levels, so the rupee is also likely to hold in a Rs48.20-49.20 range in the near term,” he added.
Shares rallied 2.55% to their best close in almost three weeks as strong US home sales data and upbeat comments by the head of the US Federal Reserve lifted investor confidence worldwide.
Foreign fund investments into local shares have been a key driver for the rupee. Foreigners have so far in 2009 bought a net $7.4 billion worth of local shares, after having sold more than a net $13 billion last year.
Dealers said rising global crude prices were adding to dollar demand from importers. Oil is India’s biggest import and refiners are the largest buyers of dollars in the local market.
Oil crept up to near $74 a barrel on Monday, within sight of a 10-month high, supported by optimism that an economic recovery will spur a rebound in energy demand.
The yen slid versus both dollar and euro on Monday as gains in equities boosted risk sentiment, steering investors towards higher-yielding currencies such as the Australian dollar. The dollar index, a gauge of the U.S. unit’s performance versus six majors, was up 0.2%.
One-month offshore non-deliverable forward rupee contracts were quoting at Rs48.68/78, slightly weaker than the onshore spot rate.
In the currency futures markets, the most traded near-month contract on the National Stock Exchange and MCX-SX closed at Rs48.6175 and Rs48.62 respectively, with the total volume on the two exchanges at about $1.8 billion.
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First Published: Mon, Aug 24 2009. 05 34 PM IST
More Topics: Markets | India | Rupee | Currency | Stocks |