Rupee snaps 3-day losing string; up 6 paise vs dollar

Snapping its three-session losing string in a see-saw trade, the rupee today closed 6 paise higher at 49.34/35 against the US currency on dollar selling by exporters after the greenback weakened in overseas markets.

However, sustained fall in local equities amid increased capital outflows capped the rupee rise, a dealer said.

At the Interbank Foreign Exchange (Forex) market, the local unit opened strong at 49.13/14 a dollar from previous close of 49.40/41 and improved further to the day's high of 49.10 following smart recovery in equities at initial stages.

Fresh dollar selling by exporters and some banks also supported the rupee rise.

However, late dollar demand from importers, mainly oil refiners weighed on the rupee and it fell back to a low of 49.52 before recovering some ground to end higher at 49.34/35.

Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said, "Rupee closed better today in a volatile trade. Indian equity markets too traded unstable throughout the day and closed down by almost half per cent."

"Strong resistance is seen at 49.80, above which we could see Rupee to trade near 50.00 levels and the trading range for the USD/INR will be 49.20 to 49.80 tomorrow," he added.

The BSE benchmark Sensex washed out early gains and closed down by 72.45 points or 0.46%, extending losses for the fourth straight session.

The dollar extended losses in New York market yesterday and the euro recovered following a report that European Union officials are discussing coordinated action to recapitalise the continent's banks.The dollar index of six major currencies was down by over 0.1% while New York crude oil was trading below USD 78 a barrel in European market today.

FIIs pulled out USD 418 million in last four trading sessions since September 29.

"The deteriorating global scenario will push the rupee to new lows. Italian credit rating being downgraded by Moody's gives a grim message about the global financial future. We can target 50 levels in the USD/INR pair," India Forex Advisors CEO Abhishek Goenka said.

The Reserve Bank of India fixed the reference rate for the US dollar at Rs 49.1918 and for the Euro at Rs 65.4394. 

The rupee premium for the forward dollar declined further on persistent receivings by exporters. The benchmark six-month forward dollar premium payable in March closed lower at 64-66 paise from Tuesday's close of 68-71 paise and far-forward contracts maturing in September also settled weak at 88-91 paise from 94-97 paise previously.

The rupee fell back against the pound sterling to end at Rs 76.25/27 from overnight close of Rs 76.04/06 and also dropped to Rs 65.84/86 per euro from Rs 65.16/18 previously. 

It, however, recovered slightly against the Japanese yen to Rs 64.39/41 per 100 yen from last close of Rs 64.41/43.

The Forex and Money markets will remain closed tomorrow, on account of 'Dusshera'.