Mumbai: The Indian rupee extended gains in the afternooon session on Wednesday tracking broad losses in the dollar versus major currencies overseas with dollar sales by foreign banks also aiding.
At 12:55pm, the partially convertible rupee was at Rs44.25/26 per dollar, firmer than Rs44.35/36 at close on Tuesday when it had fallen to 44.5075 during trade, its weakest since 13 October.
The institutional portion of the Coal India IPO, the country’s largest ever, closes on Wednesday, while retail investors have one more day.
The sale was oversubscribed on Tuesday, the second day of the four-day offering, driven by strong investor demand and lower-than-expected pricing.
Indian shares seesawed on Wednesday after a surprise rate rise in China spooked Asian peers and a $3.5 billion IPO by Coal India continued to drain investor funds.
Traders said there would be an outflow of funds when Coal India begins to refund excess subscriptions and this would push the rupee lower. They expect the rupee to weaken towards 45 when the unsuccessful bidders withdraw.
State-run Power Grid Corp, Steel Authority of India and Indian Oil Corp are some of the companies that are planning large share sales in coming months.
The dollar dipped against a basket of currencies on Wednesday, trimming gains it made after a surprise rate hike by China spurred the market to lower risk exposure, but was seen likely to stay supported due to the potential for further short-covering.
One-month offshore non-deliverable forward contracts were quoted at 44.65, weaker than the onshore spot rate.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange, MCX-SX and United Stock Exchange were at 44.3850, 44.38 and 44.37 respectively, with the total traded volume on the three exchanges a moderate $4.2 billion.