Mumbai: The rupee recovered intraday losses to post its strongest monthly gain in 10 months on Wednesday on dollar sales by banks to cash in on gains at the end of the financial year.
The partially convertible rupee ended at 44.89/90 per dollar, stronger than 45.08/09 at close on Tuesday when it hit a high of 44.88 during trade, its strongest since 10 September 2008. It hit an intraday day low of 45.1750 earlier in the day.
The rupee rose 2.7% in March, its biggest gain in a month since May 2009 and is up 3.7% over the quarter.
The currency market is closed for the next two days on Thursday for annual book closing of banks and for Good Friday.
“Due to holidays, there will be bunched-up dollar supplies on Monday. So banks sold dollars to buy it back cheaper when the market opens on Monday,” said a senior trader with a foreign bank.
Analysts expect the rupee to continue to appreciate over the next one year due to expectations of capital inflows driven by robust economic growth. The economy is estimated to grow more than 8% in the fiscal year ending March 2011.
A Reuters poll of FX strategists on BRIC currencies on Tuesday showed the rupee strengthening to 43.53 against the dollar by March 2011, supported by buoyant growth in Asia’s third-biggest economy.
The BSE benchmark Sensex posted its fifth consecutive quarterly rise with a modest 0.4% gain on Wednesday.
One-month offshore non-deliverable forward contracts were at 44.95, weaker than the onshore spot rate, as traders remain uncertain about the likely near-term direction of local shares.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX ended at 45.08 and 45.03 respectively.