Mumbai: The rupee was stronger in morning trade on Thursday after hitting a two-month high in the previous session, on the back of positive local shares and dollar inflows.
At 10:30am, the partially convertible rupee was at Rs. 44.7700/7750 per dollar after closing on Wednesday at Rs. 44.83/84 per dollar, its highest level since 4 January. It has traded in a range of Rs. 44.75-44.89 so far in the day.
“It is possible the rupee will rise with inflows likely to continue. The sentiment will remain positive as long as the flows continue,” said Rohan Naik, head of foreign exchange trading at Standard Chartered Bank in Mumbai.
Indian shares gained 0.6 percent in early trade on Thursday, with financials leading the rise, taking cues from strong Asian markets.
Foreign funds in 2011 have bought $374.55 million worth of shares through 22 March. However, they have sold shares of about $1.84 billion so far this year.
The euro’s losses against the dollar and high global crude oil prices may temper the rupee’s gains, dealers said.
Oil is India’s biggest import item and domestic oil refiners are the largest dollar purchasers in the local forex market.
Brent crude fell for a second day on Thursday, shedding as much as 0.5% towards $115, after the resignation of Portugal’s prime minister rekindled eurozone concerns, prompting oil traders to unwind long positions and take profits.
The market was still vulnerable to spikes as attention remained focused on turmoil across the Middle East and North Africa.
The euro fell on Thursday, pulling further away from a 4-1/2 month high versus the dollar on heightened worries that heavily indebted Portugal will require a bailout from the European Union.
The index of the dollar against six major currencies was up 0.15% at 75.949 points. At the end of local trade on Wednesday, it was at 75.636 points.
The one-month onshore forward premium was at 31.00 points, higher than its previous close of 30.50, while the three-month premium was at 84.75 points versus 86.50 and the one-year was at 295.75 points from the previous 296.50.
The one-month offshore non-deliverable forward contracts were quoted at 45.03, weaker than the onshore spot rate.
In the currency futures market , the most traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were all at 44.7950, with the total volume at about $2.05 billion.
