Rupee rises to 2-week high of 59.56 Vs dollar
The rupee on Friday appreciated by 11 paise to close at a two-week high of 59.56 against the dollar on fag-end sales of the US currency by exporters amid a strong rally in local equities.
Mumbai: The rupee on Friday appreciated by 11 paise to close at a two-week high of 59.56 against the dollar on fag-end sales of the US currency by exporters amid a strong rally in local equities.
Even as sustained capital inflows supported the rupee gain, a smart recovery in the dollar overseas restricted the local currency's gains, a forex dealer said.
At the Interbank Foreign Exchange market, the rupee opened lower at 59.79 from the previous close of 59.67 and dropped further to 60.17 on dollar demand from importers, mainly oil refiners. The rupee touched a record low of 61.21 on July 8.
A recovery in the dollar index overseas after US Federal Reserve Chairman Ben Bernanke's comments on continuing the monetary stimulus also weighed in on the rupee. The dollar index was up 0.40 percent against a basket of six other major currencies.
Amid talk of RBI intervention, the rupee later bounced back to a high of 59.55 as domestic shares climbed, before settling at 59.56, a rise of 11 paise or 0.18 percent.
Subdued import of gold and silver in June pulled down the country's trade deficit to USD 12.2 billion even as exports contracted 4.56 percent during the month.
"A combination of weak currency, subdued domestic demand and lower gold imports should reduce the current account deficit to around 4.3 percent of GDP in FY14 from 4.8 percent in FY13," said Nomura India economist Sonal Varma. "However, we expect rupee depreciation to continue as financing the current account deficit will likely remain difficult."
The Sensex today added 282.41 points, or 1.44 percent, after Infosys, the country's second-largest software services exporter, kept its dollar revenue guidance unchanged.
The trading range for the spot USD/INR pair is expected to be within 59.40 to 60.20, said Pramit Brahmbhatt, CEO of Alpari Financial Services (India).
Experts said the rupee today was seen temporarily crossing the "pyschologically important 60-level" due to heavy dollar demand from oil companies.
"Suddenly, there was huge demand from oil firms. That really hit the rupee but afterwards it recovered. The better trade deficit data was also sentimentally positive," said Srinivasa Raghavan, EVP (Treasury), Dhanlaxmi Bank.
Going ahead, the US economic docket includes PPI and consumer sentiment data. "If consumer sentiment data surprises to the upside it could provide a modicum of support for the dollar rebound with USD/JPY possibly running towards 99.50, EUR/USD slipping back to 1.3000 and Aussie testing the support at the USD 0.9100," said India Forex Advisors.
Meanwhile, the premium for forward dollars recovered smartly on fresh paying pressure from banks and corporates.
The benchmark six-month forward dollar premium payable in December finished higher at 171-172 paise from Thursday's close of 166-1/2-168-1/2 paise.
Far-forward contracts maturing in June also firmed up to 351-353 paise from 342-1/2-343-1/2 paise.
"There is a lot of action seen in rupee futures market at around 61-levels from both exporters and importers," said independent forex expert Moses Harding.
The RBI fixed the reference rate for the US dollar at 59.8960 and for the euro at 78.3241.
The rupee turned positive against the pound sterling to end at 89.93 from last close of 90.26 and also recouped against the euro to 77.61 from 77.93.
It rose against the Japanese yen to 59.95 per 100 yen from last close of 60.10.