Rupee rebounds from 28-mth low, RBI action suspected

Rupee rebounds from 28-mth low, RBI action suspected

Mumbai: The rupee gained on Friday, recovering sharply from a more-than-28-month low, aided by a firm euro and suspected intervention by the central bank, traders said.

Reserve Bank of India is likely to have sold dollars from around 49.60 per dollar, traders said, taking the rupee to the day’s high of 49.10, at which point it recovered 1.6% from the day’s low.

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At 12:52pm, the partially convertible rupee was at 49.28 per dollar, after touching 49.90 earlier - its weakest since 14 May. The rupee had slumped 2.5% on Thursday to 49.57/58, its biggest single day loss in nearly 3 years.

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“There is a lot of demand for dollars and RBI is the most important factor to see as to where they will come and intervene," said a trader with a private bank.

“I think we can slowly go towards 50 levels if RBI does not come."

RBI deputy governor Subir Gokarn, in an interview with a television channel, said that any intervention would be only be to smoothen volatility and not to target any particular level.

Markets fell more than 1%, adding to the previous session’s large losses, as prospect of a global recession hit world markets.

Most Asian currencies were also weaker against the dollar. For a snapshot, see

The euro was at $1.3481, marginally higher than $1.3456 at end of rupee trade on Wednesday, while the index of the dollar against six major currencies was at 78.345 points from 78.506 previously.

The world’s major economies pledged on Thursday to prevent Europe’s debt crisis from undermining banks and financial markets, and said the euro zone’s rescue fund would be bolstered.

However, dealers said the mild gains in the euro was unlikely to aid the rupee.

“I doubt it will help, given the risk aversion. Also, equities are in minus," a trader with a state-run bank said.

The one-month onshore forward premium was at 21.75 points from 21 on Thursday, the three-month was at 66.75 points from 63 and the one-year was at 132.25 points from 126.50.

The one-month offshore non-deliverable forward contracts were quoted at 50.11, 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 the MCX-SX were at 49.8200 and the United Stock Exchange were at 49.8175. The total volume was $3.9 billion.