The Hindu Business Line : Rupee recovers, gains 52 paise

THE rupee recovered some of its earlier losses on Monday as it ended at 44.2750/2850 against the dollar, 52 paise stronger than its previous close at 44.79/80 on Friday.

The weakening of the dollar in the international foreign exchange market and the strengthening of the euro against major currencies helped the rupee reverse its last week's downward movement.

"Bunched up dollar supplies over the weekend also propped up the home currency," a dealer said.

The recovery of the rupee helped instill confidence in exporters who entered the forex market to sell greenbacks, after the opening level of the currency at 44.55, they added.

The rupee, after opening with a positive gap, strengthened to 44.30/35 against the US currency within the first hour of trading. Although, the movement through the day was volatile, the home currency made gains through the day, with demand for greenbacks being moderate and other positive factors in place.

"There are concerns regarding the decisions to be taken on Fed rate in the Federal Open Market Committee meeting, but the outlook on the rupee continues to be bullish," said a dealer at a private sector bank.

Foreign investment inflows have slowed down in the past week as compared to previous few weeks, but with bullish stance on the Indian economy, FIIs are likely to continue investing on Indian bourses, he added. "The rupee might be within the range of 44.30 to 44.40 against the dollar tomorrow, with further strengthening possible," said another dealer. Trading volumes on the forex market were thin, mainly because of the year drawing to a close and speculative trading at its minimum level, he added.

Meanwhile, in the case of annualised forward premia a range-bound movement was witnessed, as they ended softer. With supply of dollars robust in the spot dollar rupee exchange market, volatile movements in forwards are unlikely, dealers said. The six-month forward closed at 1.50 per cent (1.61 per cent) while the 12-month forward ended at 1.24 per cent (1.29 per cent).