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Rupee trims early gains, ends at 39.42/43 against greenback

Rupee trims early gains, ends at 39.42/43 against greenback
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First Published: Mon, Oct 29 2007. 06 42 PM IST
Updated: Mon, Oct 29 2007. 06 42 PM IST
By Agencies
Mumbai: The rupee ended moderately higher on 29 October, at 39.42/43 against the greenback, after trimming initial gains following fairly heavy dollar demand amid surging equity markets and weak dollar overseas.
In active trade at the Interbank Foreign Exchange (forex) market, the rupee resumed stronger at 39.36/38 a dollar but later came under pressure as oil companies bought dollar to meet their month-end import proceeds.
Attributing initial firmness in the Indian unit to strong Asian equity markets and anticipation of increased capital inflows into Indian equity, forex dealers said the currency is well supported by several positive factors and may touch new highs in the near term.
Month-end dollar demand by oil refineries in the face of soaring crude prices and dollar buying from banks probably at the behest of the central bank, however, weighed on the rupee sentiment, a leading banker commented.
The rupee continued to draw support from expectations of a US interest rate cut in the Federal Reserve meeting on 31 October sent the dollar to record lows against the euro in global markets. PTI
Morning
Mumbai: The Indian rupee climbed towards its highest in more than 9-years on 29 October as dealers bet overseas funds would pour into record-breaking shares and as the dollar plumbed record lows against a basket of major currencies.
At 9:45 a.m.(0415 GMT), the partially convertible rupee was at 39.355/365 , not far from its most recent 9-“year high of 39.27, and climbing from the previous finish of 39.445/455.
“The cues are all very positive for the rupee, and it’s just a question of time before it hits a new high,” said the chief dealer with a corporate.
Dealers said the flows into the stock market were expected to be strong, which would lift the rupee. Overseas buying of local shares have been a key driver of the rupee, which has gained more than 12% this year.
The benchmark share index surged 3% to a record high in opening trades on 29 October, after gaining 9.6% last week. It has now risen more than 25%, and hit record highs in 21 of 28 sessions, since the U.S. Federal Reserve cut interest rates on 18 September.
Data showed foreign funds were net buyers of $53 million (Rs208 crore) of shares on 25 October, taking their net investment to $17.1 billion so far this year -- well above the full-year record inflow of $10.7 billion in 2005. Of that, almost $8 billion has come since the Fed rate cut.
The rupee was also boosted after the dollar hit a record low against a basket of major currencies on widespread speculation that the Federal Reserve will cut rates again on Wednesday.
Still, gains in the rupee were moderated by importer demand for dollars and dealers expected some sporadic central bank intervention to limit gains.
The Reserve Bank of India bought $40 billion in the first eight months of the year in a bid to stem the rupee’s ascent, and traders said it has been active in September and October as well. Reuters
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First Published: Mon, Oct 29 2007. 06 42 PM IST
More Topics: Markets | India | Rupee | Shares | Dealers |