slight rebound in the European unit that dropped lower yesterday. The domestic currency commenced at Rs. 44.90 per dollar and edged up to a high of 44.89 in early trades. Local shares dropped into the negative after an initial surge that dragged rupee to an intra day low of 45.05 so far during the day. However, recovering equities are likely to keep the Indian unit propped up, as rupee could be weighed lower by an advancing dollar overseas. In the spot currency market, rupee was last seen trading at 45.00 at 10.00 AM IST, flat as compared to previous close.
The European unit eased against the US dollar in early Asia today, but managed to remain above a six-week low after commodities came off lows registered late yesterday and as investor's refocused attention on prospects for interest rates to rise further in the euro zone. Nevertheless, lingering worries about Greece's debt problems continued to weigh on the single common currency. The euro was currently seen quoting at around 1.4198 after having dropped to almost 1.4124 versus the greenback yesterday.
The US dollar index, which tracks the greenback against a trade-weighted basket of six major currencies, is higher by 0.17% at 75.37. Among Asian currencies, the Taiwan dollar was down 0.12% at 28.67, the South Korean won 0.56% at 1091.20 while the Indonesian Rupiah was up mere 0.03% at 8562.50 as against the US dollar.
The domestic indices were slightly higher in opening trade amid mixed global cues, but dropped lower sharply before recovering some of the losses. Most Asian shares declined on Friday reacting to China's rate tightening news. The People's Bank of China increased banks' reserve requirements by 50 basis points, the eighth time since October in an attempt to ease inflationary pressures. Meanwhile, US markets closed with gains on Thursday as a decline in the dollar led to higher commodity prices and boosted the appetite for riskier assets. Trading in US index futures indicates that Dow could fall 27 points at the opening bell on Friday.
Foreign institutional investors (FIIs) sold Indian shares worth Rs. 420.03 crore and domestic funds bought shares worth Rs. 312.44 crore on Thursday, as per provisional figures on stock exchanges. At the time of writing, India's key benchmark BSE Sensex was up around 102 points at 18438 while S&P CNX Nifty was also higher by around 41 points at 5527.20.
In the domestic currency futures market on the NSE, the forward month May USD/INR contract opened on Friday at 45.05, higher than the spot market rupee. The contract hit an intra day high at 45.14 and registered a low at around 44.94 so far during the day. Meanwhile, euro- rupee contract was up 0.34% at 64.07 from 63.85 in the previous session. The JPY/INR contract added 0.07% at 55.77 from 55.73 while GBP/INR contract lost 0.05% to be at 73.33 from 73.37 as at close on Thursday.
At the time of writing, the NSE as well as MCX May 2011 USD/INR contract was trading at around 45.05 lower by around 6 paise or 0.14% compared to previous close at 45.11. Rupee futures will likely find an intra day resistance at 44.97.
