Rupee rises 6 paise against dollar ahead of RBI policy

 

Ahead of RBI credit policy, the Indian rupee on Monday ended 6 paise higher at 61.80 against the American currency on fag-end selling pressure from banks and exporters due to a weak dollar in the overseas markets.

The rupee resumed lower at 62.00 per dollar as against last weekend’s level of 61.86 at the Interbank Foreign Exchange (Forex). It moved down further to 62.01 per dollar on initial dollar demand from banks.

However, it recovered immediately to end at 61.80 per dollar on selling of dollars by banks and exporters, showing a gain of six paise or 0.10 per cent.

Intra-day, it hovered in a range of 61.76 and 62.01.

The dollar index was down by 0.14 per cent against a basket of major global rivals.

“Rupee appreciated against the Dollar to start the week on a positive note supported by dollar sales and foreign inflows. Rupee’s gain came after speculation that RBI could cut rates to help boost economic growth fuelled expectations of foreign fund inflows,” said Admisi Forex India Pvt. Ltd., Director, Suresh Nair.

In the international market, the greenback met with selling pressure earlier in the morning, in line with the weak tone it has exhibited since Friday when weaker-than-expected U.S. GDP figures for December quarter helped moderate he currency market’s expectation for higher interest rates.

A downbeat reading for China’s official manufacturing purchasing managers index Sunday also prompted selling of the U.S. dollars.

Meanwhile, the benchmark BSE Sensex recovered from initial losses but ended lower by 60.68 points or 0.21 per cent at 29,122.27.

Veracity Group, CEO, Pramit Brahmbhatt said, “Investors traded cautiously ahead of RBI credit policy which will be announced tomorrow. After unexpected rate cut last month, RBI is expected to keep interest rates on hold tomorrow, although some of the market players are being optimistic and are expecting further rate cut.”

The trading range for the spot USD/INR pair is expected to be within 61.40 to 62.40, he added.

The forward premia declined further on sustained receipts by exporters.

The benchmark six-month premium payable in July ended lower at 218-220 paise from 222-224 paise on last Friday and forward contracts maturing in January 2016 also fell to 412- 419 paise from 421.5-423.5 paise.

The Reserve Bank of India fixed the reference rate for dollar at 61.8840 and for Euro at 69.9413.

The rupee firmed up further against the pound to 92.82 per pound from 93.33 previously and recovered against the euro to 70.02 per euro from 70.22.

The rupee also moved up to 52.51 per 100 yen from 52.59 previously.