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Rupee gains for a fifth day; corporates sell dollars

Source : REUTERS
Last Updated: Wed, Sep 11, 2013 12:24 hrs
An employee arranges Indian currency notes at cash counter inside a bank in Agartala

The rupee rose to a three-week high on Wednesday, extending gains for a fifth session, with corporates selling the dollar as the Indian currency continued its recovery.

The rupee's sharp recovery has been aided by the easing of geopolitical concerns, with an attack on Syria appearing less imminent, and the announcement of a series of steps to attract inflows by the new central bank Governor, Raghuram Rajan.

Dealers cited large dollar inflows from a private petrochemical company as well as some likely dollar selling related to Mylan Inc's $1.6 billion deal to acquire a unit of Strides Arcolab Ltd.

Foreign institutional investors (FIIs) bought $421.15 million worth of shares on Tuesday, bringing their total to nearly $800 million over the previous four sessions.

"The panic dollar buying has reduced. Those who were sitting on the sidelines hoping for further falls in the currency have started selling. I expect the rupee to recover to 61 to the dollar," said Satyajit Kanjilal, chief executive at ForexServe.

The partially convertible rupee closed at 63.38/39 per dollar compared with 63.84/85 on Tuesday. It rose to 63.0575 in session, its best level since Aug. 19.

The rupee has now recovered 5.8 percent over the last five sessions, its longest winning streak in a year, since Raghuram Rajan took over as the central bank chief on Sept. 4 and unveiled a raft of steps including allowing banks to borrow more overseas and offering a concessional swap facility to banks to raise deposits from overseas Indians.

Globally, investors are seeking high-yielding assets after U.S. President Barack Obama pledged on Tuesday to explore a diplomatic plan from Russia to take away Syria's chemical weapons, although he voiced scepticism about it and urged Americans to support his plan to use military force if needed.

The rupee is waiting for the monetary policy on Oct 20. Prior to that, the government will detail July factory data and August inflation data.

Dealers are now focusing on whether Rajan will reverse the cash tightening steps initiated by his predecessor Duvvuri Subbarao in mid-July to curb rupee speculation.

In the offshore non-deliverable forwards, the one-month contract was at 64.12 while the three-month was at 65.37.

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 63.62 with a total traded volume of $3.4 billion.


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