Dollar inflows, RBI intervention help rupee recover by 30 paise

Traders said public sector banks sold dollars at the direction of RBI to arrest the currency slide. Rupee has lost over 10 percent since April 30.

Last Updated: Jun 21, 2013, 18:55 PM IST

Mumbai: The rupee on Friday staged a smart recovery to end 30 paise higher at 59.27 on the back of hefty corporate inflows and dollar selling by banks at the behest of RBI, amid Finance Minister P Chidambaram's assurance that there was no need for panic over the recent currency slide.

However, heavy outflow by foreign funds from equities worth about Rs 3,850 crore crore in two sessions and firm dollar overseas restricted the rupee rise, forex dealers said.

Yesterday, rupee touched life-time low of nearly 60-level intra day after US Fed's stimulus exit strategy spooked global markets.

"Some amount of corporate inflows was seen today," said Ashtosh Raina, Head of Forex Trading, HDFC Bank.

Traders said public sector banks sold dollars at the direction of RBI to arrest the currency slide. Rupee has lost over 10 percent since April 30.

"There was intervention by RBI in market, which helped the sentiment. Trading of European market, US Dow trends and domestic market performance also supported the currency," said Hemal Doshi, Chief Currency Strategist, Geojit Comtrade.

The rupee commenced lower at 59.74 a dollar from previous close of 59.57 at the Interbank Foreign Exchange market and declined further to a low of 59.80. Later, it pulled back and jumpded to a high of 59.13 before concluding at 59.27, showing a rise of 30 paise or 0.50 percent.

The dollar index, consisting of six major global rivals, was up by 0.21 percent today, limiting gains in rupee.

"A pullback was always on the cards for rupee after what we saw last few days," said Mohan Shenoi, president of Group Treasury & Global Markets at Kotak Mahindra Bank.

At New Delhi, Chidambaram emphasised that the government was "watching the situation" and RBI will take "whatever action it has to take".

The Indian benchmark S&P BSE Sensex today recovered its initial losses and closed up by almost 55 points, after tanking over 526 points yesterday as Fed's decision of slowing down bonds purchase from this year scared markets.

Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said: "After making series of lows, today rupee tried to recover some of the damage done in last few days. The trading range for the Spot USD/INR pair is expected to be within 58.80 to 59.60."

Meanwhile, premium for forward dollar fell back on fresh receipts by exporters.

Benchmark six-month forward dollar premium payable in November softened to 151-1/2-153 paise from Thursday's close of 153-1/2-155-1/2 paise. Far-forward contracts maturing in May eased to 310-1/2-312 paise from 313-1/2-315-1/2 paise.

The RBI fixed the reference rate for the US dollar at 59.3505 and for the euro at 78.5930.

Rupee bounced back against the pound sterling to 91.58 from previous close of 92.04 while improved further against the Japanese yen to 60.65 per 100 yen from 60.75.

It also firmed up against the euro to 78.26 from last close of 78.63.