Rupee up on weak dollar, but refiners check rise

Rupee up on weak dollar, but refiners check rise

Mumbai: The rupee strengthened on Tuesday, helped by the dollar’s weakness overseas, but demand for the US currency by crude refiners to pay for imports checked the rise.

The partially convertible rupee ended at 46.11/12 per dollar, about 0.4% stronger than its previous close of 46.29/30. It touched an intraday low of 46.20, after having hit the day’s high of 45.94 in early trade.

The market was closed on Monday for a holiday. Last Thursday, the rupee rose to 45.80, its best since 24 September 2008.

The dollar touched a 14-month low against a basket of currencies on Tuesday on policymakers’ comments. Federal Reserve chairman Ben Bernanke called on Monday for action on global imbalances in comments which some analysts saw as a veiled endorsement of a lower dollar.

“We are expecting more comments this week and will see how it would impact the dollar. Rupee’s rise was because of a weak dollar, though oil companies were buying dollars in the market," said a senior dealer with a foreign bank. Oil, which rose to a one-year high above $80 a barrel, is India’s largest import and refiners are the biggest buyers of dollars in the local currency market.

Indian shares closed 0.6% lower in seesaw trade on Tuesday. Foreign portfolio flows are a key driver of the rupee, and overseas funds have invested more than $13.8 billion so far in 2009, reversing outflows of a little more than a net $13 billion last year.

One-month offshore non-deliverable forward contracts was quoting at 46.16/26 per dollar, slightly weaker than the onshore rate.

In currency futures, the active near-month contracts on the National Stock Exchange and MCX-SX were at 46.11 and 46.1050 respectively.