The rupee snapped its two-week losing string and recovered by 40 paise to close at a high of 62.28 against the US dollar following fresh selling of the American currency by exporters despite capital outflows and weak local stocks.
At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced slightly lower at 62.70 a dollar from last weekend’s close of 62.68 and later it was trapped in a narrow range of 62.25 and 63.83 before concluding the week at 62.28, showing a rise of 40 paise or 0.64 percent.
In last two-weeks, it had lost 114 paise or 1.85 percent.
The benchmark S&P BSE Sensex closed the week down by 137.29 points, or 0.67 percent, while FIIs pulled out USD 173.28 million on the first four days of the week, as per Sebi data.
Jignesh Chaudhary, Head Of Research, Veracity Broking Services said, “Rupee appreciated as government cancelled the bond auction indicating that they are in a state to meet deficit target.
“India was likely to witness a Rs 15,000 crore bond auction but the government’s comfortable cash position ignited the hopes that Finance Minister P Chidambaram will be able to control the fiscal deficit within the 4.8 percent target.”
Dollar index traded weak this week as investor focus on the emerging-markets fears faded. Local equities started the week on a weak note as foreign institutional investors were net sellers over the concerns about the Federal Reserve’s withdrawal in monetary stimulus and an economic slowdown in China.
Expect Rupee to depreciate in coming days. The trading range for the USD/INR pair is expected to be within 62.00 to 63.50, he added.
Meanwhile, on Wednesday, the Reserve Bank Governor Raghuram Rajan said that India was better prepared to deal with any further US Fed tapering, but the country needs to remain vigilant to face eventualities, which also supported the falling rupee.
The rupee premium for the forward dollar dropped on fresh receipts by exporters.
The benchmark six-month forward dollar premium payable in July fell to 243-245 paise from last weekend’s close of 252-254 paise and far-forward contracts maturing in January also declined to 486.5-488 paise from 494-496 paise.
The RBI fixed the reference rate for the US dollar at 62.3155 and for the euro to 84.6830 from 62.4768 and 84.6022 last weekend, respectively.
The rupee remained firm against the pound sterling to 101.77 from last weekend’s close of 103.14 and also firmed up further against the euro to 84.51 from previous weekend’s close of 84.87.
It, too, moved up further against the Japanese yen to 61.00 per 100 yen from preceding weekend’s close of 61.27.
PTI