Rupee edges lower on $ demand after hitting 3-mth high

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SummaryAfter touching a three-month high of 53.38, the rupee on Tuesday erased initial gains to close four paise down at 53.81 against US dollar following late weakness in local stocks and sustained demand of the American currency.

After touching a three-month high of 53.38, the rupee on Tuesday erased initial gains to close four paise down at 53.81 against US dollar following late weakness in local stocks and sustained demand of the American currency.

A sluggish dollar movement in overseas markets and continued capital inflows restricted the rupee fall to a major extent, forex dealers said.

At the Interbank Foreign Exchange (Forex) market, the domestic unit resumed higher at 53.61 a dollar from overnight close of 53.77. Helped by positive factors including uptick in stocks, the rupee touched a three-month high of 53.38, a level not seen since October 23, 2012 when it had logged an intra-day high of 53.34.

It, however, succumbed to heavy profit-booking in equities after mid-session coupled with dollar selling by exporters to touch a low of 53.88. The rupee finally concluded a tad lower at 53.81, a fall of four paise or 0.07%. On Monday, it had eased by six paise or 0.11%.

The benchmark BSE Sensex, which was in positive terrain till late morning deals, closed down by 120.25 points breaking straight three-session rally while FIIs pumped in $160.13 million on Monday as per Sebi data.

The dollar index was down by 0.34% against a basket of six major global rivals as reports said the Bank of Japan voted for a 2% inflation target and shifted to open-ended asset purchases in a bid to end stagnation.

Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said, “The rupee erased the gains of first half after the domestic equity markets edged lower after testing the January 2011 level on profit taking.”

Explaining the factors behind rupee’s initial jump, Abhishek Goenka, Founder and CEO, India Forex Advisors said: “Rupee was seen appreciating initially on account of RBI’s dollar-rupee swap facility which started from Monday. It was also gaining taking cues from gains in Euro, after the Euro group leaders approved the latest tranche in bailout funding for Greece.”

However, negative stock markets restricted the gains in rupee and made it weak, he added.

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