Rupee up on strong local shares, euro’s gains

Rupee up on strong local shares, euro’s gains

Mumbai: The rupee strengthened on Monday, supported by a sharp rise in local shares, Asian peers and gains in the euro, with corporate dollar sales, possibly from a large domestic engineering conglomerate, also aiding, traders said.

At 11:35am, the partially convertible rupee was at 45.83/84 per dollar, 0.7% stronger from Friday’s close of 46.145/155.

The euro was at $1.4545 from $1.4422 at end of domestic currency market on Friday and the index of the dollar against six major currencies was at 73.535 points from 74.017 points previously.

“Rupee is being helped by euro and stocks. But the level of 45.75 may hold, as the underlying mood is cautious given the worries on global economy," said a senior forex dealer at a foreign bank.

Federal Reserve chairman Ben Bernanke on Friday stopped short of signaling further action to boost growth, but said it was critical for the economy’s health to reduce long-term joblessness.

The new head of the IMF on Saturday called on global policymakers to pursue urgent action, including forcing European banks to bulk up their capital, to prevent a descent into a renewed world recession.

Benchmark share index was up 2.7%, tailing in line with other Asian markets.

The local currency moved in a range of 45.7600-45.9925 so far in trade and dollar demand from domestic oil companies for month-end payments may cap the rupee’s rise near 45.70, traders said.

Oil is India’s biggest import item and domestic oil firms are the largest purchasers of dollars in the local forex market.

The trading range for the rupee may also be kept narrow as traders are seen avoiding position-building in a week sprinkled with market holidays.

The domestic foreign exchange market will remain closed on Wednesday and Thursday for religious festivals .

The one-month onshore forward premium was at 14.50 points from 10 points on Friday, the three-month was at 47 points from 41.50 points and the one-year stood at 152 points, from 139.

The one-month offshore non-deliverable forward contracts were quoted at 45.98, 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 MCX-SX and the United Stock Exchange were all at 45.9525. The total volume was at $2.6 billion.