Mumbai: The Indian rupee treaded water on Monday as a broad rise in the dollar against major currencies was offset by gains in shares and other Asian peers.
By 10:20 am, the partially convertible rupee was at 44.69/70 per dollar, little changed from 44.70/71 at close on Friday. It moved in a tight range of 44.6725-44.78.
The rupee had risen 4.1% in 2010, compared with 4.7% in 2009.
“Sellers will be seen in the market but oil at $92 per barrel is a risk ... 44.20 is on the cards, it’s only a matter of days,” said Vikas Chittiprolu, a senior foreign exchange dealer with state-run Andhra Bank.
Oil is India’s biggest import and refiners are the largest buyers of dollars in the domestic currency market. Demand for dollars is expected to rise with global crude prices staying high.
The index of the dollar against six major currencies was up 0.35% at 79.307 points, but most Asian currencies were stronger versus the dollar.
The US dollar ended a volatile year on Friday a bit firmer than where it began with investors gearing up for gains in early 2011 on expectations the US economic recovery was gaining momentum.
Dealers said there was some value buying seen after the sharp sell-off in the dollar on Friday. The rupee had risen 0.55% on Friday in its biggest single-day rise in three-week.
“We saw some action but the rupee is a bit stable now. Euro lost ground so the dollar opened a little higher versus the rupee. But I think buying should be there and we can see 44.80-85 levels,” said a senior dealer with a large state-run bank.
“I will keep the range right now at 44.65-44.85 for the day, possibly importers can come in at these levels,” he added.
Indian shares were trading 0.5% higher, with automobile makers leading the gains on strong December sales.
Foreign funds have bought $758 million worth of shares in the five trading sessions until Thursday, taking the total in 2010 excluding the last trading session, to a record $29.2 billion, on top of $17.5 billion pumped in the year before.
One-month offshore non-deliverable forward contracts were at 44.90, weaker than the onshore spot rate.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX were at 44.8850, with the total traded volume on the two exchanges at $835 million.