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Rupee’s stock-driven gains offset by euro fall

Rupee’s stock-driven gains offset by euro fall
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First Published: Thu, May 13 2010. 05 44 PM IST
Updated: Thu, May 13 2010. 05 44 PM IST
Mumbai: The rupee’s stock-driven gains on Thursday, on expectations of capital inflows, were offset by dollar demand from importers triggered by the euro’s fall against the US currency.
The partially convertible rupee ended at 45.08/09 per dollar, off a high of 44.94, but slightly stronger than 45.11/12 at close on Wednesday.
“We saw good flows from foreign investors. But the corporate demand for dollar was also strong. I expect the rupee in the range of 45.0 to 45.25 on Friday,” said a trader with a foreign bank.
The BSE 30-share index Sensex rose 0.41%, rising for the second straight day, as eurozone countries unveiled austerity measures, easing worries about a contagion effect from Greece’s sovereign debt problems.
Foreign funds have so far in 2010 bought shares worth a net $6 billion, helping the rupee rise 3.2%. In 2009, it had firmed 4.7% on record portfolio inflows of $17.5 billion.
The euro’s fall against the dollar and demand for the US currency from importers, particularly refiners, checked the rupee’s gains. Oil is India’s biggest import and refiners are the largest buyers of dollars in the local currency market.
The euro fell to a one-week low as expected budget cuts and fiscal tightening requirements in the eurozone outweighed a $1-trillion rescue package announced by the European Union and IMF over the weekend.
The single currency fell to a lifetime low against the Swiss franc on Thursday, in tandem with the single currency’s broad declines.
The index of the dollar against six major currencies was mostly flat at the time of the rupee’s close.
One-month offshore non-deliverable forward contracts were at 45.06/16, near 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 45.11, with the total traded volume on the two exchanges at $7.9 billion.
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First Published: Thu, May 13 2010. 05 44 PM IST
More Topics: Markets | India | Rupee | Currency | Foreign Exchange |