Rupee reverses fall tracking shares; dollar drop

Rupee reverses fall tracking shares; dollar drop

Mumbai: Rupee reversed early losses and rose on Thursday, tracking a more than 1% rise in local shares, the dollar’s weakness versus majors. Possibility of a rate hike in January also helped.

At 3:00pm, the partially convertible rupee was at 45.26/27 per dollar, after hitting 45.61, its lowest since 1 December, and stronger than 45.395/405 at the close on Wednesday.

Indian shares extended gains to 1% on Thursday afternoon, relieved after Reserve Bank of India kept key interest rates on hold as expected in its policy review.

Reserve Bank of India left interest rates on hold but warned of inflationary risks and unveiled steps to address persistently tight liquidity, adding to the possibility that it will resume monetary tightening in January.

The euro edged higher on Thursday ahead of an EU summit but remained vulnerable on euro zone debt concerns, while the dollar slipped back after a surge in US Treasury yields ebbed.

The index of the dollar against six major currencies was down 0.28% at 80.040 points.

In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange, MCX-SX and United Stock Exchange were all at 45.3550, with the total traded volume on the three exchanges at about $4.3 billion.