Mumbai: The rupee on 2 August recovered moderately to close at 40.4150/4250 against the dollar on modest gains in the equity markets and expectations of higher capital inflows.
In lacklustre trade at Interbank Foreign Exchange (Forex) market, the Indian unit opened better at 40.40/42 per dollar from the last close of 40.45/46. Later, it was trapped in a narrow range of 40.39 and 40.48. It ended the day slightly higher at 40.4150/4250 a dollar.
The rupee got support from modest recovery in equity markets where the benchmark BSE Sensex rose nearly 50 points, expecting increased portfolio investments in near future.
Foreign institutional invesors (FIIs) have pumped in over $10 billion in the current year so far, near their highest investments of $10.7 billion in 2005.
Dealers attributed the rupee’s lower levels to stray buying by oil refiners for meeting import requirements. Global crude oil prices remained high near $77 a barrel.
Lack of intervention by the Reserve Bank also aided the rupee’s firm trend. The recovery was also aided by announcement of hike in cash reserve ratio (CRR) by RBI on 31 July to suck excess liquidity in the banking system.
Meanwhile, the euro continued to weaken against the dollar while the yen remained solid, as US credit concerns and sentiment in the equity market again hogged the spotlight.