Rupee ends up on dollar inflow hope, Asian peers

The rupee strengthened on Wednesday, tracking firm Asian peers, with dollar inflows from corporates and expectations of more inflows next week outweighing weak euro and choppy local shares.

"Rupee has been supported by actual inflows in form of ECB (external commercial borrowings) of corporates in the last few days," said Rohan Naik, head of foreign exchange trading at Standard Chartered Bank.

"Also, expectation of good demand at (debt limit) auction next week is responsible for a part of the positive sentiment."

The partially convertible rupee ended at 45.0000/0100 per dollar, stronger than Tuesday's close of 45.0750/0850.

The Securities and Exchange Board of India (SEBI) will auction unutilised limits in long-term government and corporate debt on March 15, which dealers said is likely to attract good demand from foreign institutional investors (FIIs).

JP Morgan, in a note on Tuesday, reinforced this view saying there may be "decent" interest from FIIs at the debt limit auction.

The government had increased in late September the cap on foreign institutional investment in government and corporate bonds by USD 5 billion each to USD 10 billion and USD 20 billion, and had subsequently held an auction for these limits in early December.

Volumes in the forex market were hit by a technical glitch in the Thomson Reuters trading system, traders said.

Intraday, gains in most Asian currencies against the dollar also aided the rupee, traders said, largely offsetting the negative mood created by mounting losses in the euro and choppy domestic shares.

The euro fell against the dollar on Wednesday, settling well below four-month highs as investors switched their focus back to the euro zone's debt problems and away from expectations of a rise in interest rates.

The index of the dollar against six major currencies was down 0.2% at 76.686 points when the local forex market closed. On Tuesday, it ended at 76.681 points.

The one-month onshore forward premiums were marginally down at 26.00 points compared with 26.25 points on Tuesday, while the three-month premiums were higher at 79.00 points from their previous close of 76.75 points.

The one-year premium was also higher at 277.75 points versus 275.75 points on Tuesday.

The one-month offshore non-deliverable forward contracts were quoted at 45.24, weaker than the onshore spot rate.

In the currency futures market , the most traded near-month dollar-rupee contracts on the National Stock Exchange ended at 45.1625, on the MCX-SX at 45.1675, and on the United Stock Exchange at 45.1650, with the total traded volume at USD 4.36 billion.