Rupee back at 59 level; 2nd day of gains after RBI, SEBI steps
Mumbai: The rupee on Wednesday climbed 49 paise to 59.65 against the dollar, the most since June 28, after the RBI and SEBI took steps to curb volatility, while banks and exporters sold the US currency which weakened overseas.
Support came from foreign capital inflows into the equity market as overseas investors bought shares, forex dealers said.
The local currency was also helped after the Reserve Bank, aiming to curb volatility in the rupee, ordered state-owned oil companies to purchase their dollar requirements from a single public sector bank.
That followed steps announced by the central bank and capital market regulator SEBI to curb speculation in the currency derivatives market after the rupee dropped to a record low of 61.21 on Monday.
"The recent steps taken by the central bank and a recovery in the euro have helped the rupee to post gains against the US dollar today," said Abhishek Goenka, founder & CEO, India Forex Advisors. "Today's FOMC minutes are the key event for the forex markets."
The rupee resumed higher at 59.99 per dollar from the previous close of 60.14 at the Interbank Foreign Exchange Market and firmed up further to 59.63 before ending at 59.65 per dollar, a gain of 49 paise, or 0.81 percent.
It moved in a range of 59.63 to 60.21 during the day. The currency has added 96 paise, or 1.58 percent, in the past two days. On June 28, the rupee had appreciated by 80 paise.
The rupee traded strong, taking cues from a weakening dollar index, which measures the greenback against a basket of six other currencies, said Pramit Brahmbhatt, CEO, Alpari Financial Services (India).
The minutes of US Fed's June meeting will signal how long the central bank's asset-purchase program will operate. The USD 85 billion a month bond purchase programme was instrumental in adding liquidity to the financial markets.
Local equities traded weak today, capping the rupee's gains. The benchmark S&P BSE Sensex dropped 145.36 points, or 0.75 percent, to 19,294.12.
The measures taken by the regulators helped the rupee and narrowed the difference between spot and future rates.
The trading range for the spot USD/INR pair is expected to be 59.60 to 60.30.
In the global market, the dollar fell against major currencies as investors awaited indications on the U.S. Federal Reserve's time frame for slowing the pace of its monetary stimulus.
Meanwhile, the premium for forward dollars closed more or less steady on stray receipts by exporters.
The benchmark six-month forward dollar premium payable in December ended at its overnight level of 169-1/2-171-1/2 paise, while far-forward contracts maturing in June edged down further to 343-1/2-345-1/2 paise from 345-1/2-347-1/2 paise yesterday.
RBI fixed the reference rate for the US dollar at 60.1330 and for the euro at 76.8915.
The rupee gained against the pound sterling to 88.91 from the previous close of 89.43 and advanced against the euro to 76.50 from 77.39 yesterday.
It dropped to 59.59 per 100 Japanese yen from 59.49 previously.