Indian rupee bounces back from 11-month low vs US dollar

Snapping its five-day losing run,rupee rebounded from lows to close with a hefty 32p gain.

Snapping its five-day losing run,the rupee today rebounded from 11-month lows to close with a hefty 32-paise gain at 56.44 against US dollar on heavy selling of the American currency by exporters amid signs of FII inflows.

The rupee derived strength from speculation that the government is likely to raise soon the cap on FII in G-secs by USD 5 billion,which will lead to more inflows.

The local currency had lost 119 paise in the past five sessions on rising worries over current account gap and fears that withdrawal of US stimulus will hit inflows from overseas.

At Interbank Foreign Exchange Forex market,rupee resumed higher at 56.56 a dollar from last close of 56.76 8212; an 11-month low. It later moved in a range of 56.39 and 56.73 on alternate bouts of demand and supply before ending at 56.44,rise of 32 paise or 0.56 per cent.

The rupee8217;s recent weakness had prompted analysts to say the currency can revisit its all time low of 57.32 touched last June-end. RBI Governor D Subbarao has told PTI in an interview that the central bank does not target any particular exchange rate or any band for the rupee.

8220;Today,weakness in dollar index and strong gains in Euro also contributed to the gains in rupee. Rupee was supported by reports that India is likely to raise the cap on foreign institutional investment in government debt by USD 5billion soon8221;,said Abhishek Goenka,Founder amp; CEO,India Forex Advisors. The dollar index was just up by 0.03 per cent against a basket of six major global rivals.

Meanwhile,Chief Economic Adviser Raghuram Rajan told reporters in New Delhi that there is 8220;lot of unused space8221; for FII investment in goverment securities G-Secs.

Story continues below this ad

The Indian benchmark Sensex today moved down further by 64.70 points,or 0.33 per cent,while FIIs bought shares worth Rs 85 crore as per provisional data with bourses.

Pramit Brahmbhatt,CEO,Alpari Financial Services India said: 8220;Support for USD/INR spot pair is set on 56.28. The trading range for the same is expected to be within 56.25 to 56.75.8221;

8220;Reports suggest the government is looking at raising the debt limit for foreign institutional investors by USD 5 billion. Around 75 per cent of the current USD 25bn investment limit for FIIs in government bonds has been exhausted as on June 3,8221; said a note by brokerage IIFL.

Meanwhile,premium for forward dollar continued to rule sluggish on sustained receipts by importers.

Story continues below this ad

Benchmark six-month forward dollar premium payable in November declined to 159-161 paise from Monday8217;s close of 162-1/2-164-1/2 paise.

Far-forward contracts maturing in May also moved down to 316-318 paise from 321-1/2-323-1/2 paise.

The RBI fixed the reference rate for the US dollar at 56.6423 and for the euro at 73.9720.

The rupee recovered against pound sterling to 86.35 from overnight close of 86.55 and also rebounded against the Japanese yen to 56.34 per 100 yen from 56.52.

Story continues below this ad

However,it remained weak against the euro to 73.85 from last close of 73.78.