Rupee pares gains after reaching ‘09 high

Rupee pares gains after reaching ‘09 high
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First Published: Fri, May 22 2009. 05 39 PM IST
Updated: Fri, May 22 2009. 05 39 PM IST
Mumbai: The rupee rose past 47 per dollar to a five-month high on Friday before trimming gains on suspected Reserve Bank of India (RBI) intervention and dollar buying by refiners, but still notched its biggest weekly gain in 13 years.
The partially convertible rupee ended at Rs47.11/12, after strengthening as far as Rs46.90, its highest since 19 December, and stronger than its previous close of Rs47.37/38.
It rose 4.9% over the week, its biggest weekly gain in 13 years according to Reuters data, after the Congress-led coalition’s resounding election win raised expectations for economic reforms and greater foreign investment.
The rupee’s sharp gains were slowed by dollar buying by state-run banks, suspected to be acting on behalf of the RBI given the sharp gains seen this week, traders said.
“There was a bit of RBI (central bank) buying, though I think some banks unwinded morning’s long rupee positions,” a senior trader with a private-sector bank said.
Dealers said crude refiners also bought dollars. Oil, India’s biggest import, rose to a six-month high above $62 a barrel this week.
Analysts expect the rupee to strengthen further. The median forecast in a Reuters poll this week was for the rupee to end 2009 at Rs46.25, helped by foreign inflows.
Foreign investors have bought more than $3 billion of local equities so far this month, including $1 billion since the election results. The inflow is a key driver for the rupee.
The domestic equities rose 1.1% on Friday, taking their gains for the post-election week to 14.1%, their biggest weekly rise in 17 years.
One-month offshore non-deliverable forward contracts were quoting at 47.17/27, close to the onshore spot rate.
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First Published: Fri, May 22 2009. 05 39 PM IST
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