Rupee ends 5-session rally, up by 35 paise Vs dlr

Mumbai: The Indian rupee continued its north bound journey for the fifth straight session and firmed up further by 35 paise to settle at a fresh two-month high of 50.38/39 prompted by continued capital inflows amid sustained dollar selling by exporters and some banks.

Bearish dollar in global markets also helped the rupee to keep its upward march. The dollar index, a gauge of six major currencies was down by over 0.4 per cent ahead of a key meeting between Greece and its creditors later in the day. The Greek government was slated to resume talks with its bond holders, represented by the Institute of International Finance, to discuss a voluntary write-down on Greece?s sovereign debt. The dollar was also weakened after stronger- than-expected Chinese and German data helped investors to leave the relative safe haven of the greenback.

At the Interbank Foreign Exchange (Forex) market, the domestic currency resumed strong at 50.58/59 a dollar from yesterday`s close of 50.73/74, level not seen since November 14, 2011, and touched a low of 50.84 on some weakness in local stocks. But increased capital inflows amid dollar selling by exporters and some banks helped the rupee to rebound to end at 50.38/39, a net gain of 0.69 per cent. Foreign Institutional Investors (FIIs) pumped in over USD 3.0 billion in debt market and USD 838.18 billion in equities in the current month till January 17, which mainly helped the rupee rise.

However, despite sharp rise in the RIL, Indian benchmark sensex today eased by nearly 15 points or 0.09 per cent. New York crude oil was trading above USD 101 a barrel in European market today.

Mr. Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said,"Rupee traded bullishly today, mainly taking cues from dollar inflows into local debt market, Euro also traded strong against the dollar which helped Rupee to recover from its early loss made in the morning and eventually appreciated by over half per cent. Rupee gain was restricted by the weak local equities and dollar demand from oil importers."

"Expect Rupee to trade below 50.00 levels in coming days and the trading range for the Rupee will be 50.00 to 50.75 tomorrow. Market will be watching the RBI monetary policy on 24th Jan although it is widely expected that there will be no cut in interest rates as RBI is firm on its anti-inflationary stance for now. Mr. Pranab Mukherjee said today that India will struggle to meet a fiscal deficit target of 4.6% for the fiscal year that ends in March." Mr. Abhishek Goenka, CEO India Forex Advisors said.

"INR is showing short term strength and now USD/INR is showing crucial support at 50.30 where it is supported by 100 day daily EMA and 38.20 pct Fibonacci retracement. As long as this support holds Importer should take this opportunity to buy on dips. Euro is trading positive after comments from IMF that it is exploring ways to expand its lending fund by USD one trillion which would act to provide support to the global economy against any worsening of Euro zone debt crisis," he added.

The rupee premium for the forward dollar ended better on fresh stray paying pressure from banks and corporates. The benchmark six-month forward dollar premium payable in June ended up at 166-168 paise from Tuesday`s close of 164-166 paise and far-forward contracts maturing in December also finished slightly up at 278-280 paise fromt 277-279 paise.

The RBI has fixed the reference rate for the US dollar at 50.6655 and for the euro at 64.6314. The rupee continued to rule firm and settled at Rs 77.42/44 against the pound sterling from overnight close of Rs 78.02/04 and also firmed up further against the euro to end at Rs 64.59/61 from Rs 64.83/85 in the previous session. It too hardened against the Japanese yen to Rs 65.62/64 per 100 yen from last close of Rs 66.08/10.