Moving up for the second straight day,the rupee today gained a whopping 54 paise to end at 55.54 against the dollar on persistent dollar-selling by exporters amid RBI hinting at opening a separate dollar window for oil firms.
In volatile trade,the rupee resumed lower at 56.25,as against yesterday’s close of 56.08 at the Interbank Foreign Exchange (Forex) Market and hovered between 55.53-56.28 per dollar before settling the day at 55.54 per dollar.
Yesterday,it recorded a low of 56.52 against the dollar.
As a measure to contain dollar demand and help support the rupee,the Reserve bank today hinted at opening a separate dollar window for oil companies.
“The option (of opening a separate dollar window for oil companies) is open. Whether they (RBI) is doing it or not,I don’t know,because it will not be done in the public view,” RBI Deputy Governor K C Chakrabarty told reporters.
With India importing about 80 per cent of its crude oil requirements,selling dollars directly to oil firms is expected to ease pressure on the rupee,dealers said.
“The appreciation in domestic currency today happened in anticipation of some policy action next week from the government or RBI side,” said TS Srinivasan,GM (Treasury),Indian Overseas Bank.
NS Venkatesh,Treasury Head,IDBI Bank said corporates selling dollars during the day also supported the rupee.
A sharp deceleration in imports during April resulted in trade deficit narrowing to USD 13.2 billion. The drop in the balance of trade deficit is expected to reduce pressure on rupee that has lost 15 per cent since September,2011.
Meanwhile,Indian stocks today registered a sharp fall with the Sensex taking a 253-point plunge to close below the 16,000 mark,the first time in a week.
Crude oil prices fell to a fresh seven-month low in Asian trade today as Eurozone debt worries and signs of faltering demand in the United States dragged down crude markets,analysts said.
New York’s main contract,West Texas Intermediate (WTI) crude for delivery in July,was trading down 33 cents to USD 86.20 per barrel.
Some experts said that with the global economic growth slowing down,any cutting of repo rates by RBI could put more pressure on the rupee.
“Reducing the repo rate can also place further pressure on the rupee as lower policy rates brings down interest rate differentials with the US dollar,leading to rupee interest rates becoming less attractive for dollar flows,” said India Forex Advisors,CEO,Abhishek Goenka.
The premium for the forward dollar today showed a mixed trend.
The benchmark six-month forward dollar premium payable in October declined to 134-136 paise from overnight close of 138-140 paise,while far-forward contracts maturing in April rose to 274-276 paise from 262-264 paise previously.
The RBI fixed the reference rate for the US dollar at 55.9175 and for euro at 69.1297.
The rupee also firmed up against the pound sterling to 85.09 from yesterday’s close of 86.97 and also looked up to Rs 68.45 per euro from 69.61 previously. It rose against the Japanese yen to 71.11 per 100 yen from last close of 71.19.