The rupee on Wednesday staged a smart recovery after falling to a six-week low initially to close with a 18 paise gain at 53.80 on sustained dollar sales by exporters in view of weak US currency in overseas markets.
Mumbai: The rupee on Wednesday staged a smart recovery after falling to a six-week low initially to close with a 18 paise gain at 53.80 on sustained dollar sales by exporters in view of weak US currency in overseas markets.
At the Interbank Foreign Exchange (Forex) market the local unit resumed slightly better at 53.96 a dollar from yesterday's close of 53.98.
But soon after initial dollar demand from importers, mainly oil refiners, pushed rupee down to nearly six-week intra-trade low of 54.23, a level not seen since September 20.
The rupee, however, bounced back to 53.77 on dollar selling by exporters amid firm domestic stocks, before concluding at 53.80 -- a rise of 18 paise or 0.33 percent.
The dollar index was down by 0.23 percent against a basket of six major currencies on cautious trade ahead of the reopening of US financial markets later in the day for the first time after hurricane Sandy. New York crude oil was trading above USD 86 a barrel in European trade today.
The Indian stock market benchmark Sensex today closed higher by 74.53 points.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said: "The liquidity flow in global markets continued to guide the risk on sentiments inducing strengths in rupee... The dollar index continued to edge lower on expectations of the Fed to continue the liquidity programme to overcome the mass destruction caused by Hurricane Sandy."
Rupee's gains today were second straight in a row after it belied expectations by rising 10 paise to claw back to 53-level after RBI disappointed market by not cutting repo rate yesterday.
The rupee had weakened recently amid Foreign Institutional Investors (FIIs) pulling out USD 119.51 million from stocks in the past four sessions since October 25.
Besides some fund inflows, the euro's gains against the US dollar also aided the rupee sentiment today, experts said.
"Weakness in dollar internationally supported the rupee to gain against it. Improved data from Germany and speculation over Greece getting the bailout soon supported the Euro. We are targeting rupee towards 54.30 levels in the coming week," said Abhishek Goenka, Founder & CEO, India Forex Advisors.
FIIs pumped in funds worth Rs 250 crore in stocks as per provisional BSE data today.
On a monthly basis, the rupee, however, fell by around 1.7 percent in October.
Meanwhile, the premium for the forward dollar improved further today on sustained payments by corporates and banks.
The benchmark six-month forward dollar premium payable in April firmed up to 165-167 paise from yesterday's close of 163-165 paise.
Far-forward contracts maturing in October also rose to 298-300 paise from 293-295 paise.
The RBI has fixed the reference rate for the US dollar at 54.1175 and for euro at 70.1495.
The rupee edged up further against the pound sterling to 86.72 from overnight close of 86.74 and recouped against the Japanese yen to 67.42 per 100 yen from 67.96.
However, it remained weak against the euro to 70.00 from last close of 69.89.