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Rupee recovers to end steady on euro surge

Rupee recovers to end steady on euro surge
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First Published: Thu, Jun 02 2011. 05 56 PM IST
Updated: Thu, Jun 02 2011. 05 56 PM IST
Mumbai: The rupee recouped intraday losses to end nearly steady on Thursday, propelled by the euro’s surge in late trade and strong corporate dollar inflows, but dollar demand from oil companies and weak local shares kept it under pressure.
The partially convertible rupee ended at Rs 44.83/84 per dollar, little changed from Wednesday’s close of Rs 44.84/85. It touched an intraday low of 44.98.
“It’s going to be difficult for the rupee to break the 44.80 level,” said Ashtosh Raina, head of forex trading at HDFC Bank.
“Rupee is currently being driven largely by overseas markets. So it is tough call.”
Traders said the rupee’s direction on Friday would largely be driven by overnight movements in the euro and US equities.
The euro was at $1.4472 and the index of the dollar against six major currencies was at 74.340 points when the domestic market closed.
On Wednesday, the euro was at $1.4406 and the index had been at 74.527 points at the end trade in domestic currency market.
The euro rose to a one-month high against the weak dollar on Thursday, boosted by expectations of a quick-fix solution to the Greek debt crisis, although gains could be checked by investors selling into the bounce.
Intraday, the rupee had weakened to 44.98 under pressure from weak local shares but found support from corporate dollar selling and pulled back to near 44.92, traders said.
But, strong demand from oil companies ensured the unit stayed near 44.92-44.93 during most of the afternoon trading session, they said.
“It is only after the euro surged that the rupee was able to break through oil bids-created resistance near 44.90 level,” said a dealer with foreign bank.
Crude oil is India’s biggest import item and domestic oil refiners are largest purchasers of US currency in local forex market.
Oil bounced on Thursday, reversing earlier losses as the dollar fell, although gains were capped by comments from an Opec delegate that the cartel might increase its supply target in a bid to temper prices.
Indian shares snapped a two-day rise on Thursday and fell 0.6% as sluggish US economic data dented investor appetite for risk assets across world markets.
Foreign funds had pulled out nearly $1.16 billion from local equities last month.
The one-month onshore forward premium was at 22.75 points versus 24 last close. The three-month was at 71.75 points versus 74 and the one-year was at 262 points versus 268.5.
The one-month offshore non-deliverable forward contracts were quoted at 45.01, weaker than the onshore spot rate.
In the currency futures market , the most traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were at 45.0150, 45.0175, 45.0200 respectively. Total volume was $8.02 billion.
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First Published: Thu, Jun 02 2011. 05 56 PM IST
More Topics: Markets | Rupee | Currency | Asia | BSE |