Mumbai: The rupee held in a tight band on Friday to end unchanged for a third week as post-election strength remained contained by worries the central bank did not want the currency surging past Rs47 per dollar. The rupee has been unable to sustain any gain beyond Rs47 per dollar since jumping about 5% in two days after the ruling coalition won an unexpectedly strong mandate at elections, and traders have said the central bank appeared to be buying dollars to stem its strength in recent weeks.
The rupee closed at Rs47.1050/1150 per dollar, after having ended the previous two weeks at Rs47.11 each. It rose 0.2% from its Thursday’s close of Rs47.20/21. “The rupee was very steady today, just stuck like rock. That simply means the demand and supply was getting balanced. And also being a weekend, traders were not very actively interested in punting or taking large positions,” said Ashutosh Khajuria, head of treasury at IDBI Bank. Some other dealers said the central bank could have been buying dollars via state-run banks to prevent the rupee from appreciating beyond 47, but opinion was mixed.
On Wednesday, the rupee rose to Rs46.75, its strongest since early November last year, but suspected heavy central bank intervention pulled it off its highs. The main stock index rose 0.6% on Friday, extending its weekly run of gains to 13 for the first time in four years, as signals the global economic turmoil was abating boosted risk-appetite across Asia and Europe.
Dealers said slight weakness in the dollar also helped the rupee. The dollar slipped a little on Friday as rising equities, commodities and bond yields drew investors away from the liquidity and perceived safety of the US currency.