Rupee gains on dollars losses, shares watched

Rupee gains on dollars losses, shares watched

Mumbai: The Indian rupee edged higher on Tuesday as the dollar’s losses versus major units offset demand related to Coal India’s over-subscription refund.

Traders also awaited the Reserve Bank of India’s monetary policy decision due at 11:30am, where it is expected to raise rates for the sixth time this year to rein in stubbornly high inflation pressures.

“I am expecting a 25 basis points hike in key rates at the policy. It’s a sticky muddy run-up to the RBI decision. I expect the rupee to trade in a 44.37-44.50 range," said Abhijit Ray, a foreign exchange dealer with state-run Allahabad Bank.

At 10:10am, the rupee was trading at 44.41/42 per dollar, 0.1 percent above its close of 44.47/48 on Monday. It moved in a range of 44.4050-44.49.

Traders expect the Coal India refund demand to prevent any sharp rise in the rupee this week. Coal India’s almost $3.5 billion IPO, the country’s largest was 15 times covered mostly by foreign investments. The shares will be listed on Thursday.

Indian shares fell 0.2% early, as investors were cautious ahead of the central bank’s policy review and the two-day US Federal Reserve meeting that ends on Wednesday.

So far this year, foreign funds have purchased domestic shares worth a record $24.8 billion, helping the rupee gain 4.6%.

The index of the dollar against six major currencies was down 0.2%.

The dollar extended tenuous overnight gains on Tuesday after surprisingly strong US manufacturing data prompted more short-covering but rises were seen limited ahead of the Federal Reserve’s policy meeting.

One-month offshore non-deliverable forward contracts were at 44.58, weaker than the onshore spot rate.

In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange MCX-SX and United Stock Exchange were all at 44.6350, with the total traded volume on the three exchanges at about $830 million.