Mumbai: The rupee ended steady at 40.5250/5350 against the US currency in range-bound trade on 4 June, largely influenced by equity markets, which is expected to witness a fresh round of capital inflows.
The local currency once again tested 40.44 level during morning trading but came off the day’s high on some dollar buying by public sector banks, probably on behalf of the central bank.
In quiet trade at the Interbank Foreign Exchange (Forex) market, the Indian unit was trapped in a range of 40.44 and 40.55 after resuming higher at 40.50/52 per dollar over the 1 June close of 40.52/53 a dollar.
Dollar demand by banks was negligible, forex dealers said, attributing the rupee’s fall from the day’s high to weakness in equity market, which turned negative after a strong start.
The rupee was strongly supported by the capital inflows into equity market and is expected to continue its rally in the near term, they added.
India’s economy grew 9.4% in 2006-07 amid anticipation of sustained foreign direct investments in the country, providing the currency underlying support.
Meanwhile, the Reserve Bank of India (RBI) fixed the reference rate for the US currency at Rs40.47 per dollar and for the single European unit at Rs54.43 per euro.
In cross currency trades, the rupee weakened sharply against the British Sterling and the euro while it finished steady against Japanese Yen.
The Indian unit fell sharply against the sterling to close at Rs80.54/56 per pound from the 1 June close of Rs80.14/16 per pound and also turned weak against the single european currency to Rs54.57/59 per euro against last close of Rs54.44/46 per euro.
The rupee, however, closed steady against the Japanese Yen at Rs33.24/26 per 100 Yen.