Mumbai: The rupee ended stronger on Friday, after hitting its lowest in more than 1 week in the previous session, on back of firm domestic shares and broad dollar weakness overseas.
The currency’s rise, however, was limited due to caution before the union budget on Monday, traders said, adding movement in domestic shares after its release will influence the rupee to a great extent.
Indian shares gained 0.4% on Friday, snapping a three-day losing streak, helped by firmer Asian and European peers and a fall in oil prices.
The partially convertible rupee ended at 45.31/32 per dollar against Thursday’s close of 45.48/50, a level last seen on 15 February..
Intraday, the rupee moved in a 45.27-45.41 range.
“Globally, the dollar has weakened against most major currencies and buying from local oil firms seen over the past few days reduced today. In addition, oil prices have also eased,” said a foreign exchange dealer at HDFC Bank.
The South Korean won and Malaysian ringgit rose on Friday as oil pulled back from $120 a barrel and on views that regional central banks may stem currency falls, but traders said emerging market currencies remained vulnerable to further volatility in energy markets.
Crude oil prices retreated from highs, briefly turning negative, on Friday as top exporter Saudi Arabia said it was willing to step in to make up for any shortages as a result of a disruption to oil supplies from Libya.
Oil is India’s biggest import and state-run oil refiners are the largest buyers of the dollar in the domestic currency market.
The euro hovered near 2011 highs against the dollar on Friday, helped by inflation-fighting rhetoric from euro zone policymakers, while concern that unrest in Libya might spread kept the Swiss franc near a record high.
The index of the dollar against six major currencies, at the end of domestic trade, was down 0.2% at 77.177 points.
The one-month onshore forward premiums were at 29.75 points, against Thursday’s close of 26.00 points.
The one-month offshore non-deliverable forward contracts were quoted at 45.58, weaker than the onshore spot rate.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange were at 45.5950, on the MCX-SX at 45.6000, while on the United Stock Exchange they were at 45.6075, with the total traded volume at about $7.17 billion.