Rupee notches up 56-paise gain vs US dollar; GAAR postponement lifts mood

At the Interbank Foreign Exchange (Forex) market,the domestic unit opened weak at 53.63/64 and logged an intra-day low of 53.76 on early sharp fall in local equities due to negative global advices.

Moving in tandem with stocks,where late buying emerged after deferring of GAAR,the domestic unit started gaining,as exporters and some banks started selling dollars on hopes of more capital inflows in view of GAAR postponement.

The local currency bounced back to a high of 52.85 before concluding at 52.91/92,a rise of 1.05 per cent. In last four sessions,it had plunged by 0.93 paise,or 1.77 per cent.

“Announcement of deferring GAAR by one year has lifted mood. Rupee has got the initial support from the steps announced by the RBI regarding FCNR and export credit during the day,” Moses Harding,executive vice president,Head,ALCO and Economic & Market Research,of IndusInd Bank,said.

Finance Minister Pranab Mukherjee in Parliament today deferred the implementation of General Anti-Avoidance rules (GAAR) by one year from April 2013. Certain provisions in GAAR which had led great concerns among foreign investors Forex dealers even a firm dollar overseas could not able to stem the rise in the rupee.

Meanwhile,the BSE benchmark Sensex closed up by 82 points after recovering intra-day losses of over 300 points.

On rupee gains,Indian Overseas Bank GM (Treasury) T S Srinivasan said,”Rupee appreciated today due to selling of dollars by FIIs in the market. Also,heavy buying in equity along with buying of short-term bonds by FIIs supported the rupee.”

“If the positive news flow continue,rupee may appreciate to Rs 51.50 level in the short-term,” he added.

“The appreciation is mainly due to the announcement with regard to GAAR by the government,” Corporation Bank GM (Treasury) P Rajaram Karanth said,adding that rupee is likely to remain at the current level in the near-term.

The dollar index,which measures the greenback against a basket of six major rivals,surged by almost 0.30 per cent in the wake of elections over the weekend in France and Greece.

The New York crude oil was trading below USD 98 a barrel in European market today.

Pramit Brahmbhatt,CEO,Alpari Financial Services (India) said,”After accommodating overnight gains of dollar index,the rupee appreciated on RBI steps and recovery in Indian equity markets.”

“The positivity in the equities is expected to limit loses in equities thereby aiding INR regain its lost grounds,” he added.

Abhishek Goenka,CEO,India Forex Advisors said,”It will be too early to say that the trend has changed. We can expect a short lived correction in rupee up to 52.50 levels,in the near term. However,the major trend remains weak”.

The rupee premium for the forward dollar also recovered on fresh paying pressure from banks and corporates.

The benchmark six-month forward dollar premium payable in October recouped to 174-176 paise from last weekend’s close of 170-172 paise and maturing in April also ended high at 310-312 paise from 301-303 paise previously.

The RBI fixed the reference rate for the US dollar at 53.3420 and for euro at 69.3655.

The rupee also bounced back to 85.52/54 against the pound sterling from 86.47/49 previously and also shot up against the euro to Rs 68.94/96 from Rs 70.21/23. It firmed up against the Japanese yen to 66.28/30 per 100 yen from last close of 66.64/66.