Coming as a relief to the country’s ballooning oil import bill,the rupee today extended gains for the third day in a row closing it a one-week of 55.18 against the dollar as global investors returned to riskier assets as worries over Greece receded.
The domestic currency gained as much as 82 paise to a dollar in the last three days,extending a turnaround of sentiment from Thursday last when rupee was at its all-time weakest point at 56.38 to a dollar. The rupee’s 82-paise gain is the biggest winning streak against dollar in over 2 months.
Today at the Interbank Foreign Exchange (Forex) market,the rupee opened higher at 55.25 amid sustained dollar selling by exporters. It finally closed at 55.18,showing a rise of 20 paise or 0.36 per cent cent. The rupee rise was also helped by the improvement in the stock market,which notched up a gain of nearly 200 pints.
Forex dealers said in the global markets,the dollar movement was weak as investors’ concerns eased over fears of Greece’s exit from the Eurozone following an opinion poll showing that the party in favour of economic bailout package could win elections.
With India depending on imports for 80 per cent of its crude oil requirement,a stronger rupee helps in reducing the landed cost of the fuel.
Under the impact of weakening rupee,the oil marketing companies raised petrol prices by a hefty Rs 7.54-litre triggering widespread protests.
The rupee has depreciated over 12 per cent since early March has been driven by a combination of deteriorating global risk sentiment and weak domestic fundamentals.
“There was not much of demand for dollars today. The market is also slowly digesting the happenings of last week,which improved sentiments. Also,fading global risk aversion has helped rupee to appreciate today,” said N S Venkatesh,Head of Treasury,IDBI Bank.
Meanwhile,the dollar index was down sharply by 0.47 per cent against a basket of currencies. The New York crude oil was trading below USD 92 a barrel in Europe today.
Pramit Brahmbhatt,CEO,Alpari Financial Services (India) said,” the rupee traded on a firm note on positive equity markets as there has been some improvement in global risk appetite. The global currencies rebounded from there lows on some short covering and buoyed with the poll results in Greece.”
Going ahead,rupee is likely to appreciate to 54.50 level against the dollar in a few trading sessions,said Hemal Doshi,Chief Currency Strategist,Geojit Comtrade.
However,some experts feel the economy’s fundamentals remain weak and the need for reforms remains in the medium-term may cap the rupee’s rise.
“We expect the rupee average 53.75 in FY2013,trading in a 53-57 range as RBI will be cautious in making a large forex intervention as it has already spent nearly USD 20 billion until March (and some more in April and May),the RBI is likely to be careful in intervening in a big way,” Kotak Mahindra Bank,Chief economist,Indranil Pan said.
The premium for the forward dollar today ended further lower on sustained receivings by exporters.
The benchmark six-month forward dollar premium payable in October softened further to 147-149 paise from last weekend’s level of 149-151 paise and far-forward contracts maturing in April also settled weak at 273-275 paise from 277-279 paise.
The RBI fixed the reference rate for the US dollar at 55.2625 and for euro at 69.6340.
The rupee remained firm against the pound sterling to end at 86.63 from last Friday’s close of 86.86 and also improved further to 69.42 per euro from 69.63. It too rose against the Japanese yen to 69.55 per 100 yen from last close of 69.67.