Rupee Appreciates To 39.42 Against US Dollar

The rupee on December 4 appreciated by seven paise to 39.42/43 against a dollar, its fourth gain in a row, on fresh dollar selling by exporters and expectations of more capital inflows into equity. Investors built up their positions in the domestic unit in anticipation of heavy portfolio inflows into the country ahead of the US central bank meeting on December 11 which is likely to lower Fed rate by 25 basis points.

European Central Bank and Bank of England too are scheduled to meet on December 6 to consider interest rates decisions, dealers said. In quiet trade at the Interbank Foreign Exchange (forex) market, the local currency resumed firm at 39.46/48 a dollar and later moved in a range of 39.41 and 39.48 during the day. The rupee sentiment was bolstered also by the absence of the central bank, for the last couple of days. Though Foreign Institutional Investors (FIIs) have slowed down activity since last month, the capital inflows so far in the year has pushed the rupee by more than 10 per cent.

The rupee also drew support from weak dollar overseas and a fall in global crude oil prices to below $90 a barrel after rising to near $100 a barrel a weak before. Meanwhile, the benchmark Sensex today ended 74 points lower after an initial over 100-point rally.