Rupee posts smart rally

MUMBAI, APR 20: The rupee, which plunged below the 43 level against the dollar, on Tuesday posted a smart rally against the US dollar on ...

MUMBAI, APR 20: The rupee, which plunged below the 43 level against the dollar, on Tuesday posted a smart rally against the US dollar on unwinding of long dollar positions as worries over political uncertainties have partly receded following the unanimous agreement to pass the budget and Finance Bill. Share prices, on the other hand, lost ground after a good start and Sensex closed with a loss of 7 points after the high volatility in the last a few days.

The rupee closed at 42.75/76 per dollar, a nearly 11 paise rise from the overnight finish of 42.85/87 after opening higher around 42.81/83. It touched an early intra-day low of 42.81/83 on moderate dollar short-covering, according to a PTI report.

8220;Rupee-dollar outright spot dealings were fairly active but had stabilised from Monday8217;s hyper volatility and the rupee bounced back smartly owing to liquidation of long dollar positions built earlier over the political turmoil from the fall of the BJP-led government,8221; dealers said.

The agreement by allpolitical parties to pass the budget in Parliament without amendments have given a fillip to the forex market and enabled the rupee to post an handsome rally, they added. 8220;The political situation is still very fluid. We cannot predict the next move due to the continuously changing political scenario. Many corporates have decided to wait-and-watch the political crisis before taking fresh positions. In the immediate term banks prefer to unload long dollar position built earlier until a clearer picture emerges and a viable government formed,8221; said a dealer.

The rupee had declined sharply by around 14 paise on Monday and a whopping 44 paise since April 6 after political uncertainty gripped the forex market. The RBI8217;s credit and monetary policy did not have any impact on the forex trade, despite the announcement of a half percentage point cut in the cash reserve ratio to ten per cent as it had already been discounted by the market.

Meanwhile, after a better spell, pivotals failed to keep up their initialtempo and lost ground at the end on the Bombay Stock Exchange BSE today mainly on emergence of profit-taking coupled with lack of speculative support at the higher level. The Reserve Bank of India RBI8217;s credit policy failed to bring any cheer to the sentiment as the market witnessed downward trend after the RBI announced its policies.

The subdued trend at the end was also attributed to the squaring up business on the National Stock Exchange NSE which had the last day of the current settlement. Sensex BSE sensitive index dropped from the day8217;s high of 3479.21 to the 3406.67 but recovered partially to finish at 3443.99 with a small loss of 7.44 points compared to yesterday8217;s close of 3451.43. The BSE-100 index, however, showed fractional gain at 1496.36 from previous close of 1495.92.