* USD/INR ends at 54.78/79 vs 54.81/82 close on Tuesday
* Gains constrained by stronger dollar
* Rally in local shares supports rupee
By Swati Bhat
MUMBAI, May 15 (Reuters) - The Indian rupee ended marginally
stronger on Wednesday as sharp gains in domestic shares offset
the dollar's rise versus most major currencies, particularly the
Traders said there was good two-way interest in local
currency markets, with importers' demands for dollars offsetting
foreign banks' sales of the greenback.
The range-bound rupee contrasted with a rally in Indian
bonds and stocks after Reserve Bank of India Governor Duvvuri
Subbarao said on Tuesday he had taken note of falling inflation,
reinforcing bets about future rate cuts.
Rate cuts tend to bolster confidence about economic growth
and boost stocks, thus shoring up the rupee, but the global
gains in the dollar and continued concerns about India's current
account deficit have prevented the local unit from gaining.
"The rupee recovered pretty well from the day's low of 54.91
once the stock market started rallying, but there was good
corporate demand as well. The euro's fall also hurt," said
Ashtosh Raina, head of foreign exchange trading at HDFC Bank.
"I am not seeing much impact of the rate cut expectations on
the forex market as it is still far away. I expect the rupee to
hold in the 54.50 to 55.00 range for some more time," Raina
The partially convertible rupee closed at 54.78/79
per dollar, a little stronger compared with 54.81/82 on Tuesday.
The unit moved in a 54.6550 to 54.91 range during the session.
Domestic shares rose more than 2 percent to
their highest close since January 2011, as banking shares
However, the euro fell to a six-week low against a
buoyant dollar, hurt by worse-than-expected German and French
gross domestic product data that strengthened the case for more
monetary easing in the euro zone.
In the offshore non-deliverable forwards, the
one-month contract was at 54.99 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 54.93 with a total traded volume of $4.76 billion.
(Editing by Anupama Dwivedi)