Foreign Institutional Investors (FIIs) infused almost USD 1.7 billion in debt market and USD 197.14 million in equities in the current month till January 9, as per Sebi data. At the Interbank Foreign Exchange (Forex) market, the domestic unit started firm at 52.40/41 a dollar from overnight close of 52.51/52 and immediately touched a low of 52.42.
Later, it rebounded sharply to settle at 51.70/71, level not seen since December 5, 2011, a net rise of 1.54 per cent. The Indian benchmark sensex today flared up by over 350 points or 2.22 per cent to end at one-month high, which mainly supported the rupee rise. The dollar index was down by over 0.1 per cent against a basket of currencies while New York crude oil was trading below USD 103 a barrel in European market today.
The US dollar declined on Monday in the New York market as traders reversed bets against the euro after the shared currency fell last week to a 16-month low versus the dollar. Mr. Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said,"Rupee traded positive throughout the session mainly by dollar inflows, global factors today had a little to support the rise in rupee. The dollar index was slightly weak and Euro mainly traded flat. Equity markets saw one of the best days of 2012 as major indices closed above 2.2 per cent."
"Rupee is expected to remain strong in near term and the trading range for the Rupee will be 52.00 to 52.40. The Rupee closed grossly strong on the back of huge dollar inflows in the Indian debt as well as equity markets. The local bourses performed spectacularly today. As SEBI has enhanced debt limit for foreign funds and FIIs are now utilizing these limits and investing in debt due to interest rate arbitrage which exists due to high interest rates in India as compare to other western countries," Mr. Abhishek Goenka, CEO, India Forex Advisors Said.
"The limits for investing in government bonds is expiring in mid January and Foreign Investors are grabbing this opportunity as it is now widely expected that RBI is likely to cut rates due to slowdown in the economy and cooling of Inflation. The inflows in the debt market are root cause behind the appreciation in the rupee. If the inflows continue in this manner we can definitely see 50.50 levels in the markets soon," he added.
Meanwhile, Global agency Moody`s today upgraded India`s short-term foreign currency rating from speculative to investment grade, a development that will help local companies to raise funds from overseas markets at better rates. The rupee premium for the forward dollar ended steady to weak on stray receivings by exporters. The benchmark six-month forward dollar premium payable in June closed at its overnight level of 153-155 paise while far-forward contracts maturing in December eased to 257-259 paise from 260-262 paise yesterday.
The RBI has fixed the reference rate for the US dollar at 52.2255 and for the euro at 66.7978. The rupee shot up further against the pound sterling to end at Rs 79.91/93 from Monday`s close of Rs 81.08/10 and also spurted to 66.08/10 per euro from Rs 67.01/03 previously. It, however, recovered smartly against the Japanese yen to Rs 67.26/28 per 100 yen from last close of Rs 68.39/41.