Mumbai: The rupee strengthened on Wednesday, snapping a two-day losing streak, aided by gains across Asian equities and currencies, while a volatile euro limited the rise.
At 11:56am, the partially convertible rupee was at Rs 46.01/02 per dollar, 0.2% stronger from Tuesday’s close of Rs 46.1050/1150. The local unit is expected to move in a 45.90-46.10 band during the day.
“After the Swiss National Bank move, the flows into riskier assets are expected to improve and that should help the rupee,” said a senior foreign exchange dealer at a large private-sector bank.
Japan’s Nikkei share average rose nearly 2% and MSCI’s broadest index of Asia Pacific shares outside Japan gained 2.19%. Indian shares rose 1% on Wednesday, taking cues from firmer Asian peers.
The Swiss National Bank shocked markets on Tuesday by setting an exchange rate cap on the soaring franc to stave off a recession, discouraging investors anxious about flagging global growth from using the currency as a safe haven.
The Swiss franc was nursing its 10% losses against the euro a day after the central bank move to enforce a limit of 1.20 francs to the euro. The dollar came off a two-month peak against major currencies, pressured by a rebound in high-yielding currencies that tracked gains in stocks.
A sharp rise in the rupee may, however, not be seen as concerns remain over the impact of the deepening euro zone debt crisis and economic woes in the United States on global growth, traders said.
The euro was at $1.4078 from $1.4137 when the rupee closed on Tuesday, while the index of the dollar against six major currencies was at 75.529 points from 75.329 previously.
The one-month onshore forward premium was at 12.75 points from 12.50 on Tuesday, the three-month at 39 points from 37 and the one-year at 133.50 points from 127.50.
The one-month offshore non-deliverable forward contracts were quoted at 46.17, weaker than the onshore spot rate.
In the currency futures market , the most traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were all at 46.1125. The total volume at $2.2 billion.