Dilution of sanctions props up rupee

The rupee, which opened at 42.50/54, stronger than its previous close of 42.57/60, strengthened further on good dollar-selling by banks and exporters to touch its intra-day high of 42.44. "There was a lot of selling in the early part of the day by banks and corporates," a dealer in a private sector bank said.

Aftertouching 42.44, the rupee fell as a foreign bank entered to buy dollars on behalf of its corporate client to touch its intra-day low of 42.54. The rupee subsequently closed at 42.52/54 — a gain of 5 paise over yesterday’s close.

The fall in the forwards across all maturities continued unabated and dealers predict the forward rupee will soften further with sentiments dramatically improving in the forex market. The proposed launch of the Resurgent India Bond — which is likely to mop up over $2 billion — has also contributed to the positive sentiment.