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Rupee snaps two sessions of gains, ends at 59.51/52

Source : REUTERS
Last Updated: Mon, Jul 01, 2013 12:07 hrs
Cashier counts currency notes inside bank in Lucknow

The rupee came off near two-week highs to close lower on Monday, ending a two-day winning streak, as corporate inflows and a strong domestic stock market was outweighed by a late surge in dollar demand from oil importers.

Still, the rupee has recovered substantially from a record low of 60.76 hit on June 26 as a revival of global risk appetite and rumoured inflows related to Unilever's open offer for its Indian unit kept the rupee bid.

Sentiment for the rupee was also supported as provisional data showed foreign institutional investors bought shares worth 11.24 billion rupees on Friday, snapping 13 days of sales, though they remained net sellers in debt.



Investors are also hoping the government would soon announce additional economic reforms centering on opening up more sectors for foreign investments after last week approving a hike in domestic gas prices.

"The rupee gained on corporate inflows and NDF (non-deliverable forward) related selling during the first half, but good bids from oil importers pulled down the rupee later," said Hari Chandramgethen, chief of forex trading at South Indian Bank.

"I, however, expect positive sentiment on the rupee this week on likely positive stock sentiment and exporters selling dollars at higher levels."

The Indian rupee closed at 59.51/52, compared with its previous close of 59.385/395. It rose to a session high of 58.9650, a level last seen on June 19.

Several dealers cited flows related to Unilever's (ULVR.L)(UNc.AS) $5.4 billion open offer for its Indian unit, which started on June 21.

The rupee was also supported as Indian shares rose for a third consecutive session on Monday to close at their highest in nearly one month. .BO

Flows were matched by a late surge in dollar demand from state-run banks, mainly from oil, and demand from custodian banks.

In the offshore non-deliverable forwards, the one-month contract was at 59.89, while the three-month was at 60.55.

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 59.81 with a total traded volume of $5.3 billion.

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