Rupee snaps 3-day fall; custodian banks sell $
The rupee snapped a three-day losing streak on Tuesday boosted by gains in domestic shares, which raised hopes for some foreign fund inflows, while sharp losses in the dollar versus major currencies also helped.
January 18, 2011 / 19:22 IST
The rupee snapped a three-day losing streak on Tuesday boosted by gains in domestic shares, which raised hopes for some foreign fund inflows, while sharp losses in the dollar versus major currencies also helped.
The partially convertible rupee closed at 45.42/43 per dollar, 0.2 percent stronger than its 45.52/53 close on Monday, when it dipped to a seven-week low of 45.6250."There was good FPO (follow-on-offer) related dollar selling by custodian banks, but there were oil-related bids as well," said Vikas Chittiprolu, a senior foreign exchange dealer with state-run Andhra Bank.Foreign inflows are expected towards the follow-on share sale by Tata Steel, the world's seventh-largest steelmaker that aims to raise as much as 34.77 billion rupees ($764 million) this month.The offering for anchor investors opened on Tuesday, while for retail and institutional players it will remain open for three days from Wednesday.Indian shares gained 1.1 percent, helped by gains in software services and financial companies as investors bet on strong corporate earnings in Asia's third-largest economy.Foreign funds are net sellers of $710 million worth of shares in the year to Monday, pushing the rupee down 1.6 percent. In 2010, record inflows of $29.3 billion had helped the rupee gain 4.1 percent."Good buying interest was seen in the market despite gains in the stock market and euro. There was a lot of oil buying seen," said Hari Chandramgathan, a senior foreign exchange dealer with Federal Bank.The euro rose on Tuesday on buying by sovereign funds and after an influential German survey pointed to robust growth in Europe's largest economy, pushing euro zone debt concerns into the background.The dollar index against six major currencies was down 0.64 percent at 78.829 points when the rupee market closed."Not seeing a major upmove for the rupee in the short term. It may get supported around 45.00 or 45.20 levels for one more leg down. The downside for the rupee should be capped at around 45.90/46.00 levels," Chandramgathan said.Traders said there was good dollar demand from oil firms who are the largest buyers of dollars in the domestic currency market.One-month offshore non-deliverable forward contracts were quoted at 45.66, weaker than the onshore spot rate.In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange, MCX-SX and the United Stock Exchange closed at 45.5275, 45.53 and 45.5275 respectively.The total traded volume on the three exchanges was lower at $5.35 billion, compared with the usual $6 billion-$7 billion. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
