Rupee gains for 2nd day as dollar dips

Rupee gains for 2nd day as dollar dips

Mumbai: The rupee rose for the second straight day on Thursday boosted by the dollar’s sharp losses against major currencies and a rebound in the domestic share market.

The partially convertible rupee closed at 47.1250/1350 per dollar, off the day’s low of 47.35 and little stronger than Wednesday’s close of 47.16/17. On Monday, the rupee had dropped as low as 47.3850, its weakest since June 7.

“The euro came up quite a bit from afternoon levels, broadly the dollar has weakened today," said Naveen Raghuvanshi, an associate vice president at Development Credit Bank.

“Equity markets turned positive across the globe as there were rumours the stress tests tomorrow are going to be a cake walk at least for some of the big European banks."

“The rupee could probably open below 47 tomorrow (on Friday) if Dow stays positive and the overall bullish tone continues," he added.

The index of the dollar against six major currencies was down 0.9%.

The dollar fell close to a seven-month low against the yen on Thursday on downbeat comments from US Federal Reserve chairman Ben Bernanke, while better-than-forecast euro zone data buoyed the euro.

Indian shares gained 0.8% on Thursday to their highest close in nearly two-and-half years, tracking European markets which reversed early losses as banks in the continent gained ahead of their stress test results.

Buying or selling of stocks by foreign investors is a key factor that drives the rupee. So far this year, foreign funds have bought a net $8.8 billion worth of shares, adding to record inflows of $17.5 billion last year.

The rupee is forecasters’ top bet for appreciation among BRIC currencies, a new Reuters survey shows, as the growing economy draws foreign investors.

One-month offshore non-deliverable forward contracts were quoted at 47.35, 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 both closed at 47.1775 respectively, with the total traded volume on the two exchanges at about $5.1 billion.