Rupee recovers after hitting near 3-week low

Rupee recovers after hitting near 3-week low

Mumbai: The Indian rupee bounced back from its lowest in nearly three weeks on Thursday tracking a recovery in local share prices but the euro’s fall against the dollar limited the local currency’s advance.

The partially convertible rupee ended at 46.77/78 per dollar, off an early low of 47.04, which was the lowest since 26 July and about 0.1% weaker than Wednesday’s close of 46.70/71.

“The rupee will find it difficult to go below 45.50 in the next 1-2 days. A lot of people are still looking to cover their imports," said RVS Sridhar, head of global markets at Axis Bank in Mumbai.

“Our sense is in 4the next 1-2 days, the rupee should be in a broad range of 46.45-46.85 levels," he added.

The benchmark BSE share index ended flat, erasing intraday losses after dipping as much as 0.9 percent in a choppy session.

Foreigners are net buyers of $11.3 billion of domestic equities so far in 2010, adding to last year’s record $17.5 billion inflows.

The dollar’s rise overseas capped the rupee’s gains, traders said. The euro hit a three-week low versus the dollar after weak Greek data reinforced concerns about weaker euro zone economies.

The dollar index, an indicator of the dollar’s strength against six major currencies was up 0.5% at the time of the local market’s close.

Dealers said there was little impact of a softer factory data, released earlier in the day. Industrial output rose 7.1% in June from a year earlier, significantly lower than market expectations of 8.4%.

One-month offshore non-deliverable forward contracts were at 46.94, 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 ended at 46.8825 and 46.8850 respectively, with total traded volumes on both exchanges at $7 billion.