Rupee ends first week of 2012 on positive note

Mumbai: Breaking straight four weeks of losing string, the Indian rupee rebounded by 39 paise to close the first week of 2012 on a positive note at 52.71/72 against the Greenback in line with smart bounce back in local equities amid sustained dollar selling by exporters and some banks. Heavy foreign funds inflows, mainly in debt, as well as equity markets too aided the rupee recovery.

The rupee resumed lower at 53.30/31 per dollar at the Interbank Foreign Exchange (Forex) market against the last weekend`s level of 53.10/11 per dollar and hovered erratically in a range of 52.62 per dollar and 53.40 per dollar, before ending at 52.71/72 per dollar, a gain of 0.73 per cent.

In the last four weeks, the rupee has fallen by a massive 190 paise, or 3.71 per cent. Fresh selling of dollars by banks and exporters on the back of capital inflows from foreign funds mainly boosted the rupee value against the dollar, a forex dealer said. According to the data available with Securities and Exchange Board of India (Sebi), foreign institutional investors (FIIs) infused over USD 1 billion in debt markets and pumped in USD 190 million in equities till January 5.

Pramit Brahmbhatt, CEO, Alpari Financial Services (India) Pvt. Ltd said, "Rupee dominated greenback as foreign institutional investors (FIIs) were buying in Indian debt market." The BSE benchmark Sensex settled the first week of the 2012 on an optimistic note, recovering sharply by nearly 394 points to close at 15,848.80 on sustained buying by foreign funds amid some positive developments at home.

The RBI fixed the reference rate for US dollar and Euro at Rs 52.7838 and Rs 67.4618 from Rs 53.2660 and Rs 68.9005 last weekend, respectively. The benchmark six-month forward dollar payable in June ended weak at 150-152 paise fro last weekend`s close of 162-164 paise and far-forward contracts maturing in December also settled lower at 250-252 paise from 266-268 paise.

The rupee improved further against the Pound Sterling to end the week at Rs 81.77/79 from Rs 82.04/06 in the preceding weekend and also shot up further to close the week at Rs 67.43/45 per euro from last weekend`s level of Rs 68.74/76. It, however, recovered against the Japanese yen to settle the week at Rs 68.33/35 per 100 yen from Rs 68.64/66.

Buying was strong and 12 out of 13 sectoral indices closed in the green, while only BSE-FMCG ended with minor losses. Capital goods, PSUs, banking and metal segments were at the forefront of the rally. The government last week decided to allow Qualified Foreign Investors (QFIs) to directly invest in the Indian market from January 15, to attract more foreign funds against the backdrop of significant foreign capital outflows.

Reserve Bank Governor D Subbarao also indicated that it may start lowering lending rates on concerns about economic growth. Food inflation also entered the negative zone at -3.36 per cent for the week ended December 24. Finance Minister Pranab Mukherjee said that low inflation and likely reversal of tight monetary policy would boost economic growth prospects. The government on Friday also stated that it may notify 100 per cent FDI in single-brand in retail segment. All these positive factors supported the market to close in positive terrain.