Indian Rupee Gains - Jan 31, 2009

The Indian rupee on Jan 30 settled up by 10 paise against the US dollar after making a recovery from its early losses. At the Interbank Foreign Exchange (Forex) market, the domestic unit resumed lower at 49.13/14 a dollar on the back of initial weakness in the domestic equity markets amid sustained capital outflows. The rupee touched a high of 48.84 before ending the day at 48.87/88.

In the early stages the firm dollar overseas also weakened the demand for rupee. Besides this, some month-end dollar demand from the importers also put pressure on the rupee in morning deals.

The benchmark six-month forward dollar premium payable in July closed at 56-58 paise while the far-forwards maturing in January closed at 93-95 paise from 91-93 paise previously. In cross-currency trade, the domestic currency grew against the pound sterling to close at Rs 69.90/92 per pound from previous close of Rs 70.06/08.

Rupee Ends 10 Paise Lower Against US Dollar

Mumbai: After tumbling by 24 paise in morning trade, the Indian rupee recovered smartly but still ended lower by 10 paise at 40.43/44 against a dollar amidst a collapse in domestic as well as Asian stock markets, and softening of US currency worldwide. In see-saw trade at the Interbank Foreign Exchange (Forex)market, the local unit opened weak at 40.45/47 against last close of 40.33/34.

The domestic currency dipped further in late morning session to 40.59 a dollar on distinctly weak equity markets across the globe. Forex dealers said dollar buying by banks on behalf of oil refiners to their import requirements aided the weakness in rupee. The world crude oil prices yesterday set a record of 110.20 dollar a barrel in New York.

India imports nearly 70 per cent of its oil, which might further impact negatively on the economy which has already showed a sign of cooling down as industrial growth in January has fallen to 5.3 per cent against 11.6 per cent in the same month last year. Forex dealers said heavy dollar selling by exporters amidst the softening of US currency pulled the rupee upwards in later part of the day. The local unit even touched a high of 40.38 a dollar.

Recovery in rupee was also partly attributed to weak dollar overseas. Dollar touched a record 12-year lower against Yen while all-time low against euro yesterday in New York. However, the collapse of stock markets was so strong that rupee moved downward again to close the day at 40.43/44. Meanwhile, the benchmark Sensex ended sharply lower by 771 points, its sixth lowest fall, while most of the Asian markets also showed bearish trend at end today.