Mumbai: The rupee continued its upward march for the third straight week, rising by 31 paise to close at one-month high of 59.04 against the Greenback during the week under review on measures taken by the central bank to stem the rupee fall amid sustained dollar selling by exporters and some banks.
However, negative factors like weakness in local stocks and capital outflows restricted the rupee rise.
At the Interbank Foreign Exchange (Forex) market, the domestic unit resumed better at 59.30 a dollar from last weekend's close of 59.35, but dropped to a low of 59.87.
Later, it bounced back on steps taken by the apex bank to a high of 58.69 before settling the week at 59.04, showing a rise of 31 paise or 0.52 percent. In three-week of gaining string, it has flared up by 118 paise or 1.96 percent.
Seeking to tighten gold imports in the face of a widening CAD, the Reserve Bank on Monday evening set stringent conditions for importers, linking inward shipments to future exports. The restriction came when gold imports, in addition to oil, are putting pressure on the current account deficit, which soared to record high of 4.8 percent in 2012-13.
To contain the exchange rate volatility, the RBI on Tuesday announced more measures to squeeze liquidity from the banking system. It limited access to borrowed funds by reducing the liquidity adjustment facility for each bank from to 0.5 percent of net demand and time liabilities from 1 percent.
The RBI also asked banks to maintain a higher average cash reserve ratio of 99 per cent of the requirement daily as against 70 percent earlier.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) Pvt Ltd said, "Rupee continued to trade strong this week also as RBI again took some steps to make currency scarce and squeeze the liquidity to support the Rupee.
"This week on Wednesday Indian Rupee posted its biggest single-day gain in nearly a month. On the weekly basis it closed strong for the third consecutive week. During this month till now Rupee has already appreciated by more than 2.50 percent."
"Local equity markets reacted negatively on the actions taken by the RBI and lost more than 2 percent this week which capped the Rupee gain. The trading range for the Spot USD/INR pair is expected to be within 58.70 to 59.40. The dollar index which measures the greenback against a basket of six other currencies continued to trade weak for the third consecutive week. This month Dollar Index has weakened by almost 3.50 percent till now," he added.
The premium for the forward dollar firmed up further on sustained paying pressure from banks and corporates.
The benchmark six-month forward dollar premium payable in December rose further to end at 224-229 paise from last weekend's level of 203-206 paise and far-forward contracts maturing in June also finished sharply higher at 440-445 paise from 408-411 paise.
The RBI fixed the reference rate for the US dollar at 58.9133 and for the euro at 78.2180 from previous weekend's level of 59.7950 and 78.5222, respectively.
The Rupee remained weak against the pound sterling to 90.98 from preceding weekend's close of 90.62 and also dropped further against the euro to end at 78.36 from last weekend's close of 77.93.
However, it fell back against the Japanese yen to 59.88 per 100 yen from previous close of 59.20.
First Published: Saturday, July 27, 2013, 14:37