Rupee off 1-1/2 week high on profit-taking, oil

Rupee off 1-1/2 week high on profit-taking, oil

Mumbai: The rupee steadied on Thursday after an early rise to a 1-1/2 week high triggered profit-taking, with firm global oil prices also keeping a leash on gains.

Rising foreign portfolio flows into the stock market have underpinned the rupee over the few weeks, but India imports more than two-third of the oil it consumes and refiners are the biggest buyers of dollars in the local market.

At 11:35am, the partially convertible rupee was at 44.300/305 per dollar after hitting 44.23, its strongest since 11 April. It had closed at 44.32/33 on Wednesday.

“There were some profit-taking because it opened quite strong. High oil prices also weighed," a trader at a foreign bank said. “Rest of the day it should be rangy, stuck around 44.30."

Brent crude climbed above $124 a barrel on Thursday as US crude inventories fell unexpectedly last week and a sharply weaker dollar triggered a rush into riskier assets.

A weak dollar overseas and firm local shares had pushed the rupee higher earlier in the day.

The dollar extended broad losses against major currencies on Thursday, lifting the euro to a 16-month peak above $1.46 as market players seized on the upbeat mood in equities to sell the greenback for riskier assets.

The index of the dollar against six major currencies was down 0.61% at 73.921 points. It was at 74.350 points when the local forex market closed on Wednesday.

Shares were trading up 0.8%, extending gains since the start of March to about 10 percent thanks to foreign portfolio inflows of $3.4 billion.

The one-month onshore forward premium was at 26 basis points, compared with its previous close of 25.75. The three-month was at 83.50 basis points versus 84.50 and the one-year was at 319.50 basis points compared with 321.25.

The one-month offshore non-deliverable forward contracts were quoted at 44.56, weaker than the onshore spot rate.

In the currency futures market , the most traded near-month dollar-rupee contracts on the National Stock Exchange, the United Stock Exchange and the MCX-SX were all at 44.3150, with total volume at $2.80 billion.