Mumbai: The rupee erased intraday losses to end steady on Wednesday as stronger local share prices and a weaker dollar overseas helped offset dollar demand from refiners.
The partially convertible rupee ended at 46.16/17 per dollar, steady from its close on Tuesday, when it had risen to a peak of 46.10, its highest since 28 June. It moved in a range of 46.15 to 46.3050 during the session. “Corporate and investor flows appeared to be steady through the day. But we saw good dollar demand from oil companies,” said a senior dealer with a foreign bank.
Oil, India’s biggest import, fell on Wednesday for the first day in five as a rally that powered prices to three-month highs near $83 a day earlier lost steam. Refiners are the largest buyers of dollars in the domestic currency market.
“There is a psychological support at 46.10 which has not been broken. So long as this support is there, I see the rupee in the 46.10 to 46.30 range,” said Naveen Raghuvanshi, group associate vice president at Development Credit Bank in Mumbai.
The BSE benchmark Sensex tested a fresh 2-“ year peak, ending 0.6% higher. Foreign investors have bought a net $10.7 billion worth of shares in 2010, adding to a record $17.5 billion of purchases in 2009.
The dollar’s fall overseas also supported sentiment in the domestic market. The dollar was near a 15-year low against the yen on weak US data and expectations of soft US rates.
One-month offshore non-deliverable forward contracts were quoted at 46.35, 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 ended at 46.3350 and 46.34 respectively, with the total traded volume on the two exchanges at about $3.7 billion.