* Rupee ends at 59.11/12 per dlr vs 59.13/14 on Wednesday
* Traders say sustained dlr demand from importers hurts
* Dlr selling by corporates, exporters pushes INR to 5-wk
By Swati Bhat
MUMBAI, July 25 (Reuters) - The Indian rupee strengthened to
a five-week high on Thursday as the central bank's measures to
drain liquidity started to show impact, although demand for the
greenback from importers towards late trade meant the unit
closed just marginally stronger.
The rupee has now gained for a second session following the
Reserve Bank of India's additional cash draining measures on
Tuesday, after its initial steps on July 15 to defend the rupee
had failed to have much of an impact.
The RBI also paid high yields in its 52 billion rupees sale
of cash management bills on Thursday, which followed a 120
billion rupees sale of treasury bills on Wednesday, showing the
central bank's commitment to drain cash.
"The measures are finally starting to have some impact but
how long and at what levels will the rupee stabilise is the
question. We need to see where INR heads in the coming week,"
said Paresh Nayar, head of fixed income and foreign exchange
trading at First Rand Bank.
"I won't be surprised if various support levels right from
58.80 down towards 58.20 are taken out. There could be some more
announcements in store, which could be supportive of rupee,
possibly a USD bond sale, in what shape I don't know," he added.
The partially convertible rupee closed at 59.11/12
per dollar compared with 59.13/14 on Wednesday. The unit rose as
high as 58.76, its strongest since June 19.
Traders said good receiving was seen in the onshore forwards
with the one-year rate, which climbed to a 15-year high
of 519.25 points, falling sharply to 480 points.
The rupee was also lifted by good dollar sales from
corporates, particularly Essar Oil, which traders said
was tied to an external commercial borrowing, and a large
Foreign banks were also spotted selling dollars, dealers
However, demand from importers, particularly oil refiners,
to meet month-end import commitments pulled the rupee off highs.
In the offshore non-deliverable forwards, the
one-month contract was at 59.56 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
around 59.10 with a total traded volume of $3.2 billion.
(Editing by Jijo Jacob)