The Hindu Business Line : Re continues its surge

A WEAK dollar overseas and a steady spate of dollar inflows into the domestic markets aided the rupee to close 18 paise stronger on Wednesday at 44.45/46 against the greenback, against its previous close at 44.63/64.

In the bond market, securities staged a smart recovery of nearly Rs 2 across some maturities.

The boom in the equity markets over the past couple of days is reflective of the strong FII inflows that have been making their way into the country, currency traders said.

The dollar's weakness against international currency majors, such as the euro and pound sterling, has also aided in the strengthening of the rupee, according to analysts. In fact, in the last one month, the rupee has appreciated by 97 paise against the greenback. It was ruling at 45.42/43 on November 1.

"Foreign inflows shot up to nearly $6 billion today, the largest rush of foreign funds seen in some time," said a dealer at a private sector bank.

Although State-run banks were actively mopping up increasing greenback supply at levels of 44.47, perhaps at the behest of the central bank, the intervention was primarily to support a level, he added.

After staging a peak of 44.41, the rupee dipped as dollar buying continued, albeit less aggressively than most days, the dealers said.

"In a fortnight, the level of 44 a dollar will be reached, as the sentiment on the domestic currency is upbeat," said another dealer at a leading private sector bank.

Meanwhile, forwards staged a recovery as the central bank cautioned traders to cover their exposures. The annualised premia on the six-month forward closed at 1 per cent (0.93 per cent) while the 12-month forward ended at 0.81 per cent (0.77 per cent).