Rupee recovers from day’s low tracking euro

Rupee recovers from day’s low tracking euro

Mumbai: The rupee on Tuesday bounced back from the day’s lows supported by the euro’s strength versus the US unit and dollar sales by exporters, but weak local shares raised concerns about the sustainability of foreign fund inflows.

The partially convertible rupee closed at 44.69/70 per dollar, off the day’s low of 44.79 but still 0.3% weaker than its previous close of 44.57/58. On Monday, the rupee had risen to 44.2525, its strongest since 15 April.

“The rupee was mostly tracking the euro today, exporters did come in to sell dollars in between -- both together helping pull the rupee off its lows," said A. Ajith Kumar, a senior foreign exchange dealer with Federal Bank in Mumbai.

The euro strengthened against the dollar on Tuesday on reported Asian buying, pushing the greenback to an 8-1/2 month trade-weighted low, while the yen trimmed earlier falls against the US currency.

The index of the dollar against six major currencies was down 0.5%.

“The unit could trade in a range of 44.50-44.90 tomorrow with exporters probably coming in to sell on each uptick," Kumar said.

Dealers said losses in local shares raised concerns about the sustainability of large foreign portfolio investments amid a clutch of initial public offerings (IPOs).

Indian shares snapped a 3-session winning streak and eased in choppy trade as resistance emerged after the market had rallied nearly 14% over five weeks, but sustained foreign interest kept the undertone firm.

Foreign funds have bought a record $20.1 billion of Indian equities so far this year, with more than one-third of that having come in since the start of September.

A slew of private and state-run firms, including Coal India, which plans to raise up to $3 billion in what would be the country’s largest IPO, are expected to hit the market in the near term.

One-month offshore non-deliverable forward contracts were quoted at 44.83, 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 closed at 44.87, 44.8650 and 44.8725 respectively, with the total traded volume on the three exchanges at a lower than average $8.3 billion.