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Rupee off 4-week high as importers buy dollars

Rupee off 4-week high as importers buy dollars
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First Published: Mon, Sep 06 2010. 06 25 PM IST
Updated: Mon, Sep 06 2010. 06 25 PM IST
Mumbai: The rupee rose to a near four-week high on Monday boosted by firm shares and other Asian peers, but pared some gains on dollar buying by importers.
The partially convertible rupee closed at 46.53/54 per dollar, after touching 46.4550, its strongest since 11 August, and 0.2% above its close of 46.63/64 on Friday.
“Oil companies were there through the day today and the dollar too retraced against majors; this saw the rupee paring gains,” said Vikas Chittiprolu, a senior foreign exchange dealer with state-run Andhra Bank.
“Dollar bids are likely to continue tomorrow in the absence of any fresh dollar supply.”
The US markets are shut for Labour Day holiday on Monday and hence any bunched up dollar outflows would weigh on the rupee in the next session.
Most Asian currencies were stronger against the dollar following encouraging US payrolls data last Friday.
The dollar dipped on Monday and looked set to test a 15-year low against the yen after shedding the gains made after US jobs data, while better risk appetite kept the euro near a three-week high versus the US currency.
Indian shares shot to a 31-month high and ended 1.9% higher, their best single-day percentage-point gain in more than three months, tracking global stocks as concerns about the world’s largest economy facing a double-dip recession faded after encouraging US payrolls data.
Foreign funds have bought shares worth a net $13 billion so far in 2010, adding to last year’s record $17.5 billion inflows.
“We expect USD/INR to move lower this week on improved risk appetite and increased FII (foreign institutional investors) inflows into equities.... we expect the pair to trade in a range of 46.25-46.90 for the week with a downside bias,” economists at Barclays Capital wrote in a note.
The rupee’s medium-term fundamentals look weak on the back of a widening current account deficit and overvaluation on a REER (real effective exchange rate) basis and it is expected to be at 47 in three months, they added.
One-month offshore non-deliverable forward contracts were quoted at 46.76, weaker than the onshore spot rate, suggesting a bearish a near-term outlook.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX closed at 46.69 and 46.70 respectively, with the total traded volume on the two exchanges at a low $3.7 billion.
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First Published: Mon, Sep 06 2010. 06 25 PM IST
More Topics: Rupee | Currency | Foreign Exchange | Dollar | Markets |