Rupee bounces back with local shares

Rupee bounces back with local shares

Mumbai: The rupee bounced back to be steady on Thursday tracking the recovery in domestic shares and Asian currencies with some corporate selling of dollars also supporting the domestic unit.

At 3:05pm, the partially convertible rupee was 45.255/260 per dollar, off the day’s low of 45.45 per dollar, from 45.2450 per dollar on Wednesday.

Markets edged higher in choppy trade on Thursday, tracking most Asian stocks that rebounded after US stock futures rose 2%, even as renewed concerns over the euro zone’s debt crisis weighed.

The Singapore dollar rose on Thursday as fund managers looked for havens from global market turmoil while the South Korean won clawed back most of its early losses as Seoul shares resisted the downdraft from a plunge on Wall Street overnight.

Dealers said they expected the rupee to trade in a 45.30-45.50 per dollar range intra-day.

“Shares are weak and there is also demand from oil companies," said a senior trader at a private bank.

India is estimated to owe Iran around $4 billion for its oil imports and domestic oil firms have been aggressively buying dollar to make these payments.

Forwards fell as dollar shortage in the cash market prompted investors to do a “buy-sell swap" where traders bought spot dollars and sold forward dollars. They, however, did not expect the dollar shortage to continue for long.

“Strain on dollar liquidity will see bids in spot rupee," said Vikas Chittiprolu, a senior forex dealer with Andhra Bank.

The one-month onshore forward premium was at 6.00 points after falling to negative 2.75 points early -- its lowest in 34 months. After closing at 2.75 points on Wednesday.

The three-month was at 24.50 points, after dropping to 7.50%. It had ended at 23 points on Wednesday.

The one-year onshore forward premium was at 124.75 points, after falling to 83.75 points, from 123 points at close on Wednesday.

One-month offshore non-deliverable forward contracts were quoted at 45.41, weaker than the onshore spot rate.