Rupee Gains Four Paise - Feb 12, 2009

The Indian rupee also rebounded from its initial weakness and closed up by nearly four paise to 48.68/70 against the greenback. In the active trade at the Interbank Foreign Exchange (Forex) market, the local currency resumed sharply lower at 48.83/84 a dollar from previous close of 48.72/73. It touched a low of 48.88 per dollar. However, it recovered sharply in the later part of the day in line with the equity markets and closed at 48.68/70. The anticipation of the increased inflows of capital after the easing of foreign direct investment (FDI) norms by the government also helped the rupee recovery.

The Reserve Bank of India fixed the reference rate for the US dollar at Rs 48.82 and for the euro at Rs 63.07. The benchmark six-month forward dollar premium payable in July closed up at 50-52 paise as against 47-1/2-49-1/2 paise on Tuesday and along with this the far-forwards maturing in January closed up at 87-1/2-89-1/2 paise from 84-1/2-86-1/2 paise previously. In cross-currency trade, the rupee grew against the pound sterling and the euro while moved down further against the Japanese yen.

The dealers attributed the fall in the rupee to a firm dollar overseas against its major rivals after the US Senate passed the $838 bn economic stimulus plan. However, the fears over the effectiveness of the rescue plan weighed on the global equity markets.