Rupee ends first week of 2012 on positive note

Heavy foreign funds inflows,mainly in debt,as well as equity markets too aided the rupee recovery.

Breaking straight four weeks of losing string,the Indian rupee rebounded by 39 paise to close the first week of 2012 on a positive note at 52.71/72 against the Greenback in line with smart bounce back in local equities amid sustained dollar selling by exporters and some banks.

Heavy foreign funds inflows,mainly in debt,as well as equity markets too aided the rupee recovery.

The rupee resumed lower at 53.30/31 per dollar at the Interbank Foreign Exchange (Forex) market against the last weekend’s level of 53.10/11 per dollar and hovered erratically in a range of 52.62 per dollar and 53.40 per dollar,before ending at 52.71/72 per dollar,a gain of 0.73 per cent.

In the last four weeks,the rupee has fallen by a massive 190 paise,or 3.71 per cent.

Fresh selling of dollars by banks and exporters on the back of capital inflows from foreign funds mainly boosted the rupee value against the dollar,a forex dealer said.

According to the data available with Securities and Exchange Board of India (Sebi),foreign institutional investors (FIIs) infused over USD 1 billion in debt markets and pumped in USD 190 million in equities till January 5.

Pramit Brahmbhatt,CEO,Alpari Financial Services (India) Pvt. Ltd said,”Rupee dominated greenback as foreign institutional investors (FIIs) were buying in Indian debt market.”

Story continues below this ad

“The Dollar index,which tracks its performance against a basket of major currencies,traded bullishly most of the week as Euro,GBP,Yen and other currencies traded weak against the greenback simultaneously.

“It hit a one-year high against a basket of currencies and the euro fell to a 16-month low against the Dollar and sterling as worries about the euro zone’s fiscal stability persisted,” he added.

In the year 2011,rupee has crashed by Rs 8.4,or 18.79 per cent.

Forex dealers said increased demand for the dollar from importers and concerns over the widening fiscal deficit mainly weighed on the rupee sentiment in last few weeks.

Story continues below this ad

The rupee had touched an all-time low of 54.32 on December 15,2011,after which the central bank imposed curbs on bank’s trading limits to keep down the speculation on the currency.

“The current currency market is completely driven by FII inflows and hence the upside movement in the local unit is temporary as there is no fundamental news driving the movement,” Abhishek Goenka,CEO,India Forex Advisors said.

Meanwhile,food inflation entered negative zone at -3.36 per cent for the week ended December 24 against 0.42 per cent in the last week,a good sign for the Indian economy,indicating a reversal in the interest rate cycle.

The RBI fixed the reference rate for US dollar and Euro at Rs 52.7838 and Rs 67.4618 from Rs 53.2660 and Rs 68.9005 last weekend,respectively.

Story continues below this ad

The benchmark six-month forward dollar payable in June ended weak at 150-152 paise fro last weekend’s close of 162-164 paise and far-forward contracts maturing in December also settled lower at 250-252 paise from 266-268 paise.

The rupee improved further against the Pound Sterling to end the week at Rs 81.77/79 from Rs 82.04/06 in the preceding weekend and also shot up further to close the week at Rs 67.43/45 per euro from last weekend’s level of Rs 68.74/76.

It,however,recovered against the Japanese yen to settle the week at Rs 68.33/35 per 100 yen from Rs 68.64/66.