Rupee rises; no large dollar inflows expected

Rupee rises; no large dollar inflows expected

Mumbai: The Indian rupee strengthened on Thursday, helped by the dollar’s loss against majors and early gains in stocks, but dealers said it may come under pressure on likely importer dollar demand and lack of large dollar inflows.

“Oil importers are in the market every day. With oil prices rising so sharply, we expect oil importers to buy (dollars) today also," said a dealer at a foreign bank.

US crude futures were steady on Thursday after closing at a 25-month high a day earlier, getting support from US government data showing an unexpectedly heavy drawdown in crude and product inventories last week.

NYMEX crude for December delivery was up 47 cents at $88.28 a barrel, after settling up $1.09 at $87.81 a day earlier, the highest close since 8 October, 2008.

At 10:42am, the partially convertible rupee was at 44.28/29 per dollar compared with Wednesday’s 44.30/31 close.

“Most of the (dollar) inflows came in yesterday. The rupee will now mostly be rangebound. On either side, there is no trigger. Overseas funds are cutting their (dollar) positions ahead of the year-end," said another dealer at a foreign bank.

Power Grid Corp of India, the world’s third-largest power transmission company, on Tuesday launched a share sale to raise up to $1.7 billion before it closes on Friday. The sale was fully covered on its first day.

Foreign funds have bought shares worth a record $28.5 billion so far in 2010, compared with last year’s $17.5 billion.

Indian shares were trading down 0.2% after rising as much as 0.3% in early trade on Thursday taking cues from firm Asian markets.

The dollar lost steam on Thursday after four days of gains but remained close to significant barriers which if broken could see its short-covering rebound stretch higher against the likes of the yen and euro.

The dollar index against six majors was down 0.05%.

One-month offshore non-deliverable forward contracts were at 44.55, weaker than the onshore spot rate.

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 at 44.4475, 44.4450 and 44.4500 respectively, with the total traded volume on the three exchanges at about a moderate $754.2 million.