MUMBAI, Dec 5: The rupee continued its upward march against the US dollar at the interbank foreign exchange market here on Friday. Opening at Rs 38.55/60 - stronger than Thursday's close of 38.90/95 - the Indian unit remained at these level for most part of the day and closed at Rs 38.83``There was some panic selling of dollars by exporters early in the morning. That is why the rupee appreciated in the early morning trades," a dealer with a private bank said. Although most trades were conducted at these levels during the day, the State Bank of India entered the market to buy dollars towards the second half of the day which saw the rupee lose ground and touch a low of 38.90``The SBI came on behalf of its corporate clients which shows that there is an underlying demand for dollars among corporates,'' dealers said. It finally closed at Rs 38.83Dealers said that the volumes were still low and a bullish sentiment towards the rupee had returned. "MTNL will bring in its dollars through the foreign banks," a dealer in a foreign bank said. Market players attributed the rupee recovery to the RBI package (including a hike in CRR) and the success of the global depository receipt (GDR) issue of Mahanagar Telephone Nigam Limited (MTNL). The RBI decision to raise the interest rate at its fixed rate repo to 6.5 per cent from 5.0 per cent also aided the recovery.The rupee has rebounded because importers were now spacing their dollar purchases and were not in a hurry to cover their positions while exporters were replacing their dollar earnings. The current rally was also due to some operators adopting a wait-and-watch attitude before putting fresh pressure on the rupee, dealers said.In the meantime, Finance Minister P Chidambaram said ``it appears that conditions are returning to near normalcy now that the political uncertainty has ended.''
