Mumbai: The Indian rupee continued to rule firm for the fifth week in a row, appreciating further by 100 paise to end at 5-1/2 month high of 51.85 against the Greenback during the shortened week under review on heavy dollar selling by exporters and some banks amid firm local equity markets.
Persistent capital inflows too boosted the rupee value against the dollar, a forex dealer said.
The Forex market was closed on October 2, 2012 on account of ‘Mahatma Gandhi Jayanti’.
At the Interbank Foreign Exchange (Forex) market, the local currency resumed the week lower at 53.00 a dollar from last weekend’s close of 52.85 and eased further to a low of 53.01 on stray dollar demand from importers, mainly oil refiners, and some banks.
Later, it moved in a wide range between 51.35 and 53.01 before ending the week at 5-1/2 month high of 51.85, a rise of 100 paise or 1.89 percent. Previously, the rupee had settled at 51.47 on April 17, 2012. In straight five-week of gaining streak, the rupee has spurted by 367 paise or 6.61 percent.
The BSE benchmark Sensex closed the week higher by 175.72 points or 0.94 percent, extending gains for the fifth straight week.
Foreign Institutional Investors (FIIs) injected USD 187.45 million on Thursday, taking a total to USD 16.50 billion in the year 2012 till October 4, which mainly supported the rupee.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) Said,” The INR continued to extend gains after weak beginning. The pace of gaining steepened after the mid week holiday but posted a reversal on the last the day of the short week. The strength in INR was backed by the rising foreign capital flows due to active policy reforms by the government.”
“Exporter selling and corporate selling in a bid to lock in higher prices in anticipation of further strengthening of INR added fuel to the rally. The Oil importers backed off from locking their payments due to a strengthening outlook for INR. The Current Account deficit narrowed down from 4.3 percent to 3.9 percent MoM reducing pressure on dollar demand.
“The dollar index maintained a softer stance in the week and a decisive move below 79.00 shall extend loses towards 78.00 mark,” he added.
“For the week Importers can create a long hedge around the 51.50 – 52.00 levels for their payments as a rebound can be expected after sharp appreciation.
Exporters can use the weakness towards 53.00 levels to initiate a partial short hedge with a stop loss above 53.60 levels as to cover their receipts.
“The crucial levels for INR appreciation are 51.50 levels and for depreciation the 53.10 levels can be closely watched as rise above 53.10 levels shall weaken the pair till 53.60 levels,” he further commented.
The RBI fixed the reference rate for US dollar and euro at Rs 51.6185 and Rs 67.1735 from Rs 52.6970 and Rs 68.1485 last weekend, respectively.
The rupee premium for the forward dollar ended lower on fresh receivings by exporters.
The benchmark six-month forward dollar payable in March settled down at 160-162 paise from last weekend’s close of 165-167 paise and far-forward contract maturing in September also ended lower at 304-306 paise from 311-313 paise.
The rupee shot up further against Pound Sterling to end the week at 83.89 from preceding weekend’s level of 85.59 and firmed up sharply against the Japanese yen to 66.07 per 100 yen from 68.10.
It also continued to rule firm against the euro to 67.45 from last weekend’s close of 68.3
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