Mumbai: The rupee strengthened on Thursday, mostly tracking the movement of the euro against the dollar globally and the stock market, dealers said.
The partially convertible rupee ended at 46.69/70 per dollar, about 0.6% stronger than its close of 46.98/99 on Wednesday.
“Market is very choppy, volatile. No one can take a view on the rupee now. It is only following the euro,” said a dealer at state-run Union Bank of India.
The Indian unit moved in a range of 46.47 to 46.70 per dollar during the day.
“There are no (dollar) flows. Market is looking at euro, risk appetite globally,” said another dealer at a foreign bank.
Indian shares ended up 1.68% to their best close in three weeks, tailing other Asian peers, as solid US home sales data rekindled hopes the global economic recovery was on track and boosted stock markets worldwide.
The recovery in stocks raised expectations of capital inflows, while the dollar’s losses against major units also helped.
The dollar fell across the board on Thursday as a rise in share markets on the back of strong US economic data helped to cool extreme risk aversion.
The index of the dollar against six major currencies was mostly flat at close of local trade. Almost all Asian peers were stronger compared to the dollar.
By 1130 GMT, the euro was at $1.2237, near the day’s high of $1.2326. The single currency has found its footing after sliding as low as $1.2110 on Tuesday, its weakest in more than four years.
On Friday, the rupee is expected to extend its choppy run amid lack of clarity on risk appetite globally and the euro’s movement, and may gyrate in a band of 46.50-46.65, dealers said.
“Dealers wil stay light as they will wait to see the non-farm payroll data in the US,” said the foreign bank dealer.
The US labour department is scheduled to issue employment data for May at 1230 GMT.
“It is just not possible to punt on the rupee now,” a dealer said.
One-month offshore non-deliverable forward contracts were quoted at 46.80/90, weaker than the onshore spot rate.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX both ended at 46.8450, with the total traded volume on the two exchanges at about $6.7 billion.