Rupee up 39 paise after 3-day losses after RBI said to step in
Mumbai: The rupee gained for the first time in four days Monday, appreciating 39 paise to 61.73 against the dollar, amid indications the RBI had stepped in to support the local currency after a spate of weak economic data.
The rupee also rose on fresh dollar sales as the US currency weakened overseas before the Federal Reserve meeting.
The local currency recovered from early losses even as government data showed wholesale price index (WPI) inflation climbed to a 14-month high of 7.52 percent in November, strengthening chances of a rate hike by the Reserve Bank at its policy review meeting on Wednesday.
Fresh capital outflows and weak local equities failed to negatively affect the rupee, a forex dealer said.
At the interbank foreign exchange market, the rupee opened lower at 62.15 a dollar from Friday's close of 62.12 and declined further to 62.24 amid hesitancy in local stocks and dollar demand from importers.
It recovered as exporters and some banks sold dollars to settle at the day's high of 61.73, a rise of 39 paise or 0.63 percent.
"Rupee was seen giving a muted reaction to the poor WPI data released today as RBI was seen selling dollars in the market. The central bank is seen coming to the rescue as economic indicators are trying to put pressure on the rupee," said Abhishek Goenka, CEO of India Forex Advisors.
Retail inflation soared to 11.24 percent last month, while factory output contracted 1.8 percent in October.
The 30-share benchmark S&P BSE Sensex declined for the fifth day in a row and lost 56 points. Overseas investors pulled out a net Rs 432.02 crore from stocks last Friday, according to provisional data with the stock exchanges.
The dollar index was down 0.21 percent against a basket of six major global rivals ahead of the Federal Reserve meeting starting tomorrow. The Fed may indicate when it will tapering its stimulus programme.
"Rupee appreciated by over half percent mainly taking cues from dollar index which is trading weak for the second consecutive day," said Pramit Brahmbhatt, CEO of Alpari Financial Services (India).