ET:Rupee gains on Essar Steel flows; ends at 59.27/28 per dollar
MUMBAI: The rupee rose on Friday from its record low hit in the previous session, helped by inflows related to a $1 billion overseas loan of Essar Steel, but the currency still posted its worst week in a year.
The local currency fell 3 per cent in the week, its seventh successive weekly loss. It slumped to a record low of 59.9850 on Thursday amidst an emerging market sell-off sparked by the Federal Reserve's signal of a rollback in its monetary stimulus.
Dealers continue to remain wary of central bank intervention, while government officials are expected to soon unveil measures directed at opening more sectors for foreign investment.
The rupee has fallen 9.2 per cent since the start of May, and is among the most vulnerable emerging market currencies given its hefty current account deficit.
That makes the current account deficit data next week a key indicator for currency markets, which will also closely monitor global movements in the dollar.
"Corporate inflows helped the rupee gain. Selling by exporters after the currency weakened to all-time lows in the previous session aided the rupee to close with gains," said Vikas Babu Chittiprolu, a senior dealer with Andhra Bank.
There is no need to react and panic over the rupee's fall, Finance Minister P Chidambaram said on Friday, adding that the central bank will do whatever is needed on the rupee.
The partially convertible rupee closed at 59.27/28 per dollar, against its previous close of 59.57/58. It traded in a 59.13-59.80 band during the session.
The rupee's gains on Friday were largely attributed to inflows related to Essar Steel's $1 billion overseas borrowing, dealers said.
The currency was also helped by some unwinding of non-deliverable forward trades, they added.
Foreign funds have been heavy sellers of rupee debt and have turned negative on Indian equities. An auction of government bond quotas for foreigners attracted moderate demand on Thursday.
In the offshore non-deliverable forwards, the one-month contract was at 59.68, while the three-month was at 60.36.
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 all closed around 59.35 with a total traded volume of $8.5 billion.
