Rupee steady after volatile trade

The rupee ended steady against the US currency after swinging either-way on alternate bouts of hectic dollar buying and selling in volatile trade at the interbank foreign exchange (forex) market.

Closing at the overnight finish of 45.84/86 per dollar, the rupee moved erratically either-way in a broad range of 45.7100 and 45.9100, sandwiched between improved market sentiments, following the budget proposal to further liberalise the foreign direct investment (FDI) regime and the new proposed turnover tax. The investment ceiling for FIIs in debt funds has been stepped up from $1 billion dollar to $ 1.75 billion.

Foreign banks shed long dollar positions ahead of the announcement of the budget and after the FDI limits were raised, liquidated more dollar positions to drive the rupee to a peak of 45.70/72.

With improved market sentiments, traders expect the rupee to rally tomorrow, but any sharp gains may invite central bank intervention in support of exporters.