Mumbai, April 30: The Indian rupee strengthened on Friday as early gains in domestic shares and firm regional peers cheered sentiment, but a further upside was capped by month-end dollar demand from refiners and importers.
At 11:30 a.m. (0600 GMT), the partially convertible rupee was at 44.44/45 per dollar, 0.2 per cent stronger than 44.5150/5250 at close on Thursday. On Wednesday, the unit hit an intra-day low of 44.7650, its lowest since April 5. “The rupee has been pretty volatile lately but overall bullishness continues. Equities too are positive and there are conflicting signals in terms of Greece,” said Naveen Raghuvanshi, an associate vice president with Development Credit Bank.
“44.70 is a good resistance for the dollar in the near-term, so unless another major global shock comes up, we should hold in a range of 44.10-44.70. If the Greece bailout happens, then we could be at around 44.10 levels by end of next week.”
Investors remained uneasy about the outlook for Greece even as the debt-stricken country took steps to secure an aid package.
Moody’s Investors Service could become the second major rating agency to downgrade Greece’s ratings to “junk” status in the next few days, an analyst with the firm said on Thursday.
Dealers said there was some month-end demand in the market which was limiting the rupee’s upside.
Oil is India’s biggest import and refiners are the largest buyers of dollars in the local currency market with their demand tending to peak at the end of each month when they are required to make payments for their imports.
Most Asian currencies rose versus the dollar.
The euro extended gains on Friday, as hopes of a quick Greek rescue package spurred investors to cover short positions, while the Australian dollar rallied on growing talk of an interest rate hike next week.
Sensex were on track to post their third straight monthly gain and were trading up 0.7 per cent mirroring the rise in global stocks, with financials leading gains.
Foreign fund inflows into the domestic share market have reached $6.3 billion so far in 2010, on top of the record $17.5 billion inflows logged in 2009. These inflows have helped the rupee rise 4.4 per cent so far this year.
One-month offshore non-deliverable forward contracts were quoting at 44.51, weaker than the onshore spot rate.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX were both quoted at 44.5375, with the total traded volume on the two exchanges at about $1.9 billion.
—Agencies