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Rupee recovers from 1-week low; corps sell dollars
March 14, 2014 / 12:11 PM / 4 years ago

Rupee recovers from 1-week low; corps sell dollars

MUMBAI (Reuters) - The rupee recovered from one-week lows to end largely unchanged on Friday, as signs of continued strong foreign buying in the share and debt markets helped offset global concerns about military tensions in Ukraine and about China’s economy.

An employee counts rupee currency notes inside a private money exchange office in New Delhi July 5, 2013. REUTERS/Adnan Abidi/Files

Despite the gains, the rupee was showing signs of waning momentum after a powerful rally that sent the currency to its strongest against the dollar since early August on Tuesday.

For the week, the partially convertible currency fell 0.2 percent, snapping a two-week winning streak, despite data showing sharply easing consumer and wholesale inflation and a slight uptick in industrial output.

Whether the rupee can regain that momentum will largely depend on foreign investors, who have been net buyers of more than $2 billion in shares over the previous 20 sessions and of $2.3 billion in bonds in March.

A Reuters poll Thursday showed that long positions in the rupee tripled compared with two weeks ago and rose to their highest level in two years.

“Big dollar selling by some corporates and a late recovery in stocks helped the rupee recover. I think we may see the appreciation trend continuing going into 60.50,” said Uday Bhatt, senior dealer at UCO Bank.

The partially convertible rupee closed at 61.19/20 per dollar compared with 61.17/18 on Thursday on the back of good corporate demand for the currency from an engineering company.

That allowed the currency to recover after it had slipped to a one-week low of 61.55 to the dollar in early trade.

Although the influence of global factors has waned somewhat, traders say they would still monitor developments, especially as tensions resurfaced in Ukraine.

A recent batch of weak Chinese data has also accentuated worries about the health of the world’s second biggest economy.

Indian markets are closed on Monday for a public holiday.

In the offshore non-deliverable forwards, the one-month contract was at 61.67 while the three-month was at 62.39.

Editing by Anupama Dwivedi

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