Rupee strengthens to over one-week high

MUMBAI Mon Feb 25, 2013 5:20pm IST

1 of 2. An employee uses an electronic machine to check a rupee note inside a bank in Allahabad December 16, 2011.

Credit: Reuters/Jitendra Prakash/Files

Related Topics

MUMBAI (Reuters) - The rupee strengthened to its highest level in over a week on Monday, boosted by dollar sales by custodian banks, positive sentiment ahead of the upcoming budget and heavy dollar selling in the non-deliverable forwards market.

Investors are increasingly hopeful the government will, in its budget on Thursday, announce measures to attract more foreign fund flows into the country.

Net inflows into the country's equity market have been a key determinant of the rupee's fortunes in recent years. Foreigners have so far this year bought $8.4 billion worth of local shares after purchasing $24.55 billion in 2012.

"I expect a positive week for the rupee and think it will appreciate towards 53.50 this week," said Samir Lodha, managing director at QuantArt Market Solutions.

"Pre-budget expectation build-up will help on the domestic front," he added.

The partially convertible unit closed at 53.8650/8750 per dollar, after touching 53.86, its strongest since February 15. The unit had closed at 54.1750/1850 on Friday.

Traders said gains in the domestic sharemarket also helped the rupee. Indian shares ended marginally higher after touching their lowest in 2013 intraday as technology firms such as Infosys gained on hopes the budget would provide incentives to exporters.

However, continued dollar demand from oil refiners, the largest buyers of dollars in the domestic currency market, to meet month-end import commitments limited further gains in the rupee.

"NDFs have been seeing heavy dollar selling pushing the USD/INR down locally as well. But good demand from oil limited a further downside," a senior dealer with a state-run bank said.

The spot non-deliverable forward was mostly stronger than the onshore spot rate through the session, dealers said. The spot NDF closed at 54.97 while the most-traded one-month NDF ended at 54.26.

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 53.87 with a total traded volume of around $8 billion.

(Editing by Subhranshu Sahu)

FILED UNDER:

Reuters Showcase

Markets Weekahead

Markets Weekahead

Column - Caution advised in a trader’s market  Full Article 

Reuters Poll

Reuters Poll

RBI seen holding rates steady on Tuesday, minority of analysts expect cut  Full Article 

GDP Revised

GDP Revised

Economic growth revised up by almost 50 percent  Full Article 

Australian Open

Australian Open

Hingis wins Australian Open mixed doubles title with Paes   Full Article 

Houston's Daughter

Houston's Daughter

Bobbi Kristina Brown revived after found unresponsive in tub  Full Article 

India Art Fair

India Art Fair

Art fair turns India's capital into art hub.  Full Article 

Movie Review

Movie Review

"Rahasya" is an ode to Agatha Christie.  Full Article 

Review: Hawaizaada

Review: Hawaizaada

Movie Review: Hawaizaada  Full Article | Related Story 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage