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Rupee gains as custodian banks sell dollars

Rupee gains as custodian banks sell dollars
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First Published: Thu, Jan 06 2011. 02 24 PM IST
Updated: Thu, Jan 06 2011. 02 24 PM IST
Mumbai: The rupee bounced off near three-week lows on Thursday afternoon as some custodian banks were sold dollars, possibly for some debt limit increase related inflows, traders said.
By 2:50pm, the partially convertible rupee was at Rs 45.23/24 per dollar, after hitting Rs 45.43, its lowest since 20 December, and stronger than Rs 45.33/34 at close on Wednesday.
“There has been heavy selling by some custodian banks from around Rs 45.38 levels, not sure what flows but seems like some inflows towards the increase in the FII debt limits,” said the chief foreign exchange dealer with a private bank.
Existing and fresh corporate bond and government bond limits were fully subscribed at the auction in early December and most of the inflows were expected in early 2011.
The dollar steadied on Thursday after a surge in the previous session, with investors reluctant to chase the currency higher ahead of Friday’s non-farm payroll numbers.
Shares were trading down 0.8% following a sharp rise in the weekly food price data.
Food inflation accelerated for the fifth straight week to the highest in more than a year, reinforcing fears it has spilt over to broader prices and cementing expectations of a rate increase in January.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX were both 45.4050, with the total traded volume on the two exchanges at about $5 billion.
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First Published: Thu, Jan 06 2011. 02 24 PM IST
More Topics: Rupee | Markets | Currency | Dollar | Foreign Exchange |