Rupee crawls back to 52-mark on dollar inflows
Mumbai: Snapping a four-day losing trend, the rupee Thursday closed 37 paise higher at 52.68 on the back of capital inflows worth USD 200 million, amid Finance Minister P Chidambaram playing down any serious threat of a rating downgrade by S&P.
At the Interbank Foreign Exchange (Forex) market, the domestic currency commenced slightly weaker at 53.09 a dollar from overnight close of 53.05. It touched a low of 53.16 on continued dollar demand from importers and some weakness in stocks in the initial stage.
However, tracking the recovery in stock market after Chidambaram's rating comment in Tokyo, the rupee bounced back from mid-session and touched a high of 52.63.
The rupee concluded at 52.68 -- a rise of 37 paise or 0.69 percent. In past four sessions, it had fallen by 131 paise.
FIIs too pumped in Rs 1,043 crore (approx. USD 200 million) in stocks as per provisional BSE data.
"I don't think there is a serious threat of downgrade", Chidambaram said in Tokyo when asked about his reaction to the recent threat of downgrade of India's credit rating in 24 months by S&P if more reforms measures were not implemented.
Forex dealers said weakness in dollar index, a gauge of six global rivals, which was down by 0.33 percent after a downgrade of Spanish government debt, also helped rupee rise.
"Rupee shrugged of the weakness of previous session on rising capital inflows and active reforms agenda," said Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said.
Earlier Thursday, government approved road projects worth Rs 1,500 crore and raised retail prices of urea marginally by Rs 50 per tonne to incentivise the retailers to provide sales receipts of crop nutrients to the Centre.
Bankers said the rupee appeared to have ignored the widening trade gap that rose to a 16-month high of USD 18 billion in September after exports declined for the fifth month in a row.
Meanwhile, the Sensex also closed higher by 173.65 points or 0.93 percent after falling by 162.26 points Wednesday on selling due to S&P's downgrade threat.
"The investor sentiment was raised by Finance Minister P Chidambaram's comments in Tokyo that there was no threat of downgrade of the country's credit rating by S&P's. The positive European market also supported the Indian equity markets. India's IIP figure will be released tomorrow, which will be keenly eyed by the investors," said Abhishek Goenka, Founder and CEO, India Forex Advisors.
The premium for the forward dollar continued to rule weak on sustained receipts by exporters.
The benchmark six-month forward dollar premium payable in March ended lower at 147-1/2-149-1/2 paise from yesterday's close of 152-1/2-154-1/2 paise.
The premium for far-forward contracts maturing in September dropped to 288-1/2-290-1/2 paise from 295-297 paise.
The RBI has fixed the reference rate for the US dollar at 53.0730 and for euro at 68.2365.
The rupee also recovered against the pound sterling to 84.48 from Wednesday's close of 84.91 and also recouped to 68.08 per euro from 68.30.
It rebounded against the Japanese yen to 67.21 per 100 yen from last close of 67.75.