BackRupee rises tracking euro, ignores markets
Rupee rises tracking euro, ignores markets
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Mumbai: The rupee pulled away from three-week low to end stronger on Friday even as the share market fell to its lowest since late November, finding support from the euro’s recovery against the dollar.
The partially convertible rupee ended at 46.72/73 per dollar, off a low of 46.92 and stronger than Thursday’s close of 46.88/89. It had hit 46.97 during trade on Thursday, its lowest since 27 November. It was down 0.4% during the week.
“The dollar’s fall helped the rupee to rise. The outlook for next week is a stronger rupee if there’s a recovery in equities," said a senior trader with a foreign bank.
The euro recovered after steep falls versus the dollar and yen and cut losses against the Swiss franc. The dollar index against six majors was down 0.2%.
“A lot of exporters sold dollars, seeing the rupee recover," the trader said.
The rupee gained even as share prices extended their losses for the week to 2.3%. The share market is a key influence on the rupee as its moves are seen as cues for foreign buying or selling of stocks.
Up to mid-December foreign investors had bought $16.5 billion of equities in 2009, data from Nomura showed, helping drive the main stock index up by about three-quarters.
There have been concerns that foreign investors may lock in profits and repatriate funds into the end of the year, and that has weighed on the rupee in recent sessions.
“Domestically, the fundamental story of a broad-based trend of rupee appreciation remains intact, and we maintain fundamental support at 45.0/dlr for end-March 2010 and we expect net capital flows to top $60 billion for FY10," Yes Bank’s chief economist Shubhada Rao said in a note.
One-month offshore non-deliverable forward contracts were quoted at 46.78/88, weaker than the spot rate.
In currency futures, the most traded near-month contracts on the National Stock Exchange and MCX-SX were at 46.81, from Thursday’s 46.9275 on both exchanges.
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