The rupee recovered from one-week lows on Wednesday, as a rise in domestic shares raised expectations of foreign capital inflows into the stock markets, but the dollar's rise overseas limited these gains. The partially convertible rupee closed about 0.4 percent stronger at 46.98/99 per dollar, after touching an intraday low of 47.29, its weakest since May 26, according to Thomson Reuters data. It had touched an intraday peak of 46.89. On Tuesday, it had dropped 1.7 percent to 47.16/17 in its biggest one-day fall since a 2.6 percent drop on Nov. 12, 2008, according to Thomson Reuters data. "The Sensex rising was a big boost for the rupee and expect it to trade in the 46.90 to 47.15 range against the dollar on Thursday," said a senior trader with a foreign bank. The benchmark BSE Sensex ended 1 percent higher. Foreign fund flows into and out of the domestic share market are a decisive factor for the rupee's moves. In May, the rupee fell 4.3 percent as foreigners pulled out $2 billion from stocks. The dollar's gains overseas checked the rupee's rise. The yen hit a two-week low against the dollar after the resignation of Japanese Prime Minister Yukio Hatoyama, while the euro was steady near a four-year low. The dollar index was up 0.4 percent against six major currencies at the time of the domestic market's close. One-month offshore non-deliverable forward contracts were quoted at 47.15, weaker than the onshore spot rate. In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX ended at 47.1525 and 47.16, respectively, with the total traded volume on the two exchanges at about $7.4 billion.

Source