Rupee near 2-month high on dollar inflows, firm shares

Rupee near 2-month high on dollar inflows, firm shares

Mumbai: The rupee climbed to its highest level in nearly two months on Friday, buoyed by robust dollar inflows, higher local shares and strong Asian peers.

At 11:04am, the partially convertible rupee was at 44.580/585 per dollar, after touching 44.56, its strongest since 5 May. It had closed at 44.695/705 on Thursday.

“The vote was passed in Greece yesterday. So there is a lot of risk taking in the market. All the indicators are positive, and there is good amount of dollar selling in the market," a trader with a state-run bank said.

Traders said export-driven companies were cashing in their dollar receipts, while foreign fund flows into the stock market had also picked up. They forecast a 44.50-44.70 range for the day.

The Greek parliament approved detailed austerity and privatisation bills on Thursday in a crucial vote to secure emergency funds and avert imminent bankruptcy, but longer-term dangers still lurk.

Indian shares gained 0.6% in early trade, taking cues from firm Asian markets and as fears of a default by Greece receded. The main index is on course to post a seventh day of gains, following a pick-up in foreign fund buying.

Most Asian currencies were stronger against the dollar.

The index of the dollar against six major currencies was up 0.04% at 74.330 points -- but below 74.473 at the end of the local forex market on Thursday, while the euro was at $1.4515 from $1.4473.

Traders said dollar demand from oil refiners could weigh on the rupee.

India imports more than 70 percent of its crude oil needs and domestic oil refiners are the largest buyers of dollars in the local forex market.

Brent and US oil fell on Friday after manufacturing in China hit a 28-month low, raising concerns that fuel demand at the world’s second largest oil importer may slow with the market also watching the progress of reserve oil stocks sales by IEA member nations.

The one-month onshore forward premium was steady at 24.50 points, the three-month also steady at 74.50 points, and the one-year was at 255.50 points from 253.50 at previous close.

One-month offshore non-deliverable forward contracts were quoted at 44.74, 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 44.78. The total volume was at $2.37 billion.