Rupee pares losses as Swiss sets euro target rate

Rupee pares losses as Swiss sets euro target rate

Mumbai: The rupee recovered most of the lost ground on Tuesday aided by a rebound in the euro and local stocks after the Swiss National Bank set a floor for the euro/Swiss exchange rate.

Dollar sales from exporters also supported the rupee, traders said.

The partially convertible rupee ended at 46.1050/1150 per dollar, 0.3% weaker than its previous close of 45.985/995 on Monday, after moving in a 45.96-46.17 band during the day.

The Swiss National Bank shocked foreign exchange markets by setting a minimum exchange rate target of 1.20 francs to the euro on Tuesday, knocking back a currency rally which has threatened its economy with recession.

“That was a major announcement. Within minutes, the euro jumped," said N.S. Venkatesh, treasurer at IDBI Bank.

“The (local) stock market also recovered, which made the rupee give up most of its losses."

The Swiss franc plummeted versus the euro and the dollar after the announcement.

The euro was at $1.4137 when the local markets closed, above the day’s low of $1.4039 and higher than its $1.4122 previous close.

However, the euro’s retreat from the day’s high of $1.4275 knocked the rupee off the day’s high.

The index of the dollar against six major currencies was at 75.329 points, up from 75.056.

“The rupee should be a bit stronger on the back of this," a senior trader with a private bank said.

Dealers see the rupee in a 45.90-46.10 band in the near-term.

India’s main 30-share BSE index Indian shares shrugged off an early slide and rebounded 0.9%.

The one-month onshore forward premium was at 11.75 points from 10.25 on Monday, the three-month at 36.50 points from 34.25 and the one-year at 127.50 points from 125.

The one-month offshore non-deliverable forward contracts were quoted at 46.26, 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 46.1950, 46.1900 and 46.2000, respectively. The total volume at $7.21 billion.