RTRS:Rupee up on dlr inflows; choppy shares may weigh
(Reuters) - The rupee reversed early losses and edged up on Wednesday, supported by dollar inflows mostly towards a foreign investment in an Indian company.
At 11:48 a.m. (0618 GMT), the partially convertible rupee was at 48.9200/9250 per dollar, 0.3 percent stronger than Tuesday's close of 49.065/075, after moving in a 48.8600-49.2150 band so far in the day.
Dollar inflows, mostly on account of a stake sale by Reliance Capital in its insurance arm to Japan's Nippon Life Insurance, helped the rupee recover, traders said.
Earlier in September, Reliance Capital received regulatory approval to sell a 26 percent stake in the business to Nippon Life, and had said the deal was likely to close in a few weeks.
"The rupee opened weaker in the morning because of negative shares and gains in the dollar overseas, but then there were good inflows relating to the Nippon deal, which pushed the rupee up," a senior dealer with a state-run bank said.
The BSE Sensex dropped 0.7 percent in choppy trade as investors looked for more assurances on European policymakers' ability to resolve the euro zone debt crisis.
Dollar demand from oil refiners and local shares are likely to weigh on the rupee during the day, traders said.
Oil is India's largest import item and oil refiners are the largest buyers of dollars in the domestic market.
Brent crude fell below $107 after sharp gains a day earlier, weighed down by a stronger dollar as investors sought refuge in the greenback.
The euro was at $1.3575, compared with $1.3547 when the rupee closed on Tuesday, while the index of the dollar against six major currencies was at 77.795 points against 77.911.
The one-month onshore forward premium was at 20.25 points from 21.75 on Tuesday, the three-month was at 64.50 points from 65.50 and the one-year was at 128.25 points from 129.
The one-month offshore non-deliverable forward contracts were quoted at 49.18, weaker than the onshore spot rate, suggesting a bearish near-term outlook.
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 49.1100. The total traded volume on the three exchanges was $2.68 billion.
(Reporting by Shamik Paul; Editing by Aradhana Aravindan)
