* Rupee ends at 54.21/20 per dlr vs 54.15/16 on Monday
* Demand from oil firms, custodian banks pulls rupee off
* USD/INR may hold in a range of 53.50 to 54.50 in near term
By Swati Bhat
MUMBAI, April 17 (Reuters) - The Indian rupee hit its
highest level in seven weeks on Wednesday on rising rate cut
hopes, but demand for the greenback from oil firms and custodian
banks weighed and pushed the rupee marginally down on the day.
Early gains in the domestic share market along with foreign
fund flows helped the rupee to rise to its highest level since
However, a sell-off in European stocks and dollar buying by
state-run banks along with custodian bank demand pulled it off
"The rupee appreciation is temporary as there will be
regular (dollar) buyers and hedgers chipping in like today. I
think 54.50 is likely in the near-term with 53.50 being the max
on the downside," said Samir Lodha, managing director at
QuantArt Market Solutions.
The partially convertible rupee closed at 54.21/20
per dollar versus its previous close of 54.15/16. The unit rose
to as much as 53.77, its strongest since Feb. 28.
Rate cut bets have gained traction following marginal growth
in factory output in February along with retail inflation
nearing single-digits and wholesale inflation falling to
"Inflation coming down is positive, and means a good chance
of a repo or a repo and CRR cut at the May 3 review," Lodha
"But the fall in gold prices will push up demand and not
have any major impact on the current account deficit
immediately," Lodha said, adding he recommends importers to
increase their hedge ratios.
The fall in global commodity prices has boosted the rupee
significantly in the last two sessions as it is expected to ease
pressure on the country's record current account deficit which
has been a key factor keeping the rupee weak this year.
In the offshore non-deliverable forwards, the
one-month contract was at 54.41 while the three-month was at
In the currency futures market, the most-traded
near-month dollar/rupee contracts on the National Stock
Exchange, the MCX-SX and the United Stock Exchange all closed at
around 54.26 with a total traded volume of $8.35 billion.
(Editing by Bijoy Koyitty)