Mumbai: The Indian rupee met with strong resistance from importers and oil firms when it breached the 45 per dollar mark on Monday but continued foreign fund buying of local shares helped it hold near four-and-half month highs.
At 2:22pm, the partially convertible rupee was at Rs45.12/13 per dollar after hitting Rs44.99, which was its highest since 13 May, and firmer than Rs45.25/26 at close on Friday.
Dealers said there was good dollar demand from importers including oil firms. Oil is India’s biggest import and refiners are the largest buyers of dollars in the local currency market with their demand tending to peak at the end of each month when they make payments.
Indian shares trimmed gains and were trading up just about 0.4%, after having climbed more than 1% to a fresh 32-month high earlier in the day, as economic data in the US bolstered sentiment across Asian markets.
Foreigners have pumped $4.5 billion into Indian shares this month, taking net investment so far in 2010 to $17.4 billion. The inflows had lifted the rupee 1.3% last week, its best weekly rally in three months.
The index of the dollar against six majors would be watched for cues. Most Asian units too rose versus the dollar.
One-month offshore non-deliverable forward contracts were quoted at Rs45.35, 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 all at Rs45.3650, with the total traded volume on the three exchanges at about $6.9 billion.