The Hindu Business Line : Rupee rises to 7-month high

THE rupee strengthened to a seven-month high on Monday riding on the back of large foreign investment inflows and a dollar weakening against major currencies.

The absence of dollar purchases by State-run banks, usually done on the behest of the central bank, and dollar sales by exporters also assisted the rupee's upward ride, dealers said.

The rupee closed at 44.80/81 against the dollar, stronger by 23 paise over the previous close at 45.0300/0350.

"This level was expected for some time now, as not only is the dollar losing shine against other major currencies, but hefty FII inflows are also helping the surge," said a dealer at a private bank.

On May 7, the domestic currency ended stronger at 44.6500/6700 against the greenback.

After touching this high, it edged down over political uncertainty following the general elections.

However, with strong economic fundamentals, the currency continued on its appreciation track, another dealer said.

The one-way upward movement witnessed on Monday was off the mark during early trading when the rupee weakened to 45.0150 levels.

Forward premia were trading above par after the near-month forwards had been pushed into discounts in the previous session as exporters actively covered through buy-sell swaps.

The annualised forward premia moved northward on the back of importer covering.

The six-month annualised forward premium closed at 0.59 per cent (0.40 per cent) while the 12-month forward premium ended at 0.67 per cent (0.45 per cent).