Mumbai: The rupee snapped a three-day losing streak on Wednesday driven by gains in the euro, strong Asian currencies and positive local equities.
But, caution before the US Federal Reserve’s rate decision due at around 10:00pm and month-end dollar demand from importers may keep the rupee in a narrow band, traders said.
At 11:04am, the partially convertible rupee was at Rs 44.3700/3750 per dollar, 0.3% stronger than its Rs 44.5100/5200 previous close.
“I am seeing a range of 44.35-44.55 (per dollar) for the rupee today,” said a senior forex dealer at a foreign bank. “We need to see how the euro and world markets react to the Fed move, though most expect the euro to continue inching higher.”
The euro flew to a 16-month high of $1.4715 after breaking above $1.47. It was last at $1.4682.
The common European unit was at $1.4607 at end of local forex market session on Tuesday.
The dollar fell broadly Wednesday, hitting a fresh nadir against the Swiss franc and a 29-year low against the Australian dollar as investors expect no surprises from the US Federal Reserve’s policy meeting later in the day.
The index of the dollar against six major currencies was down 0.30% at 73.619 points, compared with 73.918 points at end of trade in domestic forex market on Tuesday.
Gains in the rupee may be limited due to month-end dollar purchases by importers, especially oil companies, the top buyers of the dollar in the local forex market.
Most Asian currencies were also stronger. See for a snapshot.
The one-month onshore forward premium was at 27.00 basis points (bps) versus its previous close of 28.75 bps. The three-month was at 82.00 bps versus 82.50 bps and the one-year was at 316.50 bps compared with 318.00 bps.
The one-month offshore non-deliverable forward contracts were quoted at 44.62, 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 United Stock Exchange and the MCX-SX were all at 44.3725, with total volume at $3.11 billion.