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Our Bureau

Mumbai, Nov. 4 The rupee appreciated by 95 paise, its biggest single day gain against the dollar in almost a decade, to close at 47.69 to a dollar as against the previous close of 48.64, buoyed by the gains in the equity market and improved supply of dollars.

According to dealers, exporters sold dollars expecting the rupee to appreciate further on the back of fresh equity purchases by FIIs.

The currency has gained by Rs 1.32 from its October 24 closing low of 49.96 against the dollar. Last week, the rupee had depreciated to a record low of 50.29 to the dollar.

According to a forex dealer with a public sector bank, the rupee gained strength in sync with the surge in the benchmark BSE Sensex. The benchmark index ended up 293 points at 10,631 on expectation that the liquidity easing measures by the Reserve Bank of India, coupled with moves by banks to cut lending rates, extend credit to mutual funds and non-banking finance companies, would ease liquidity pressures.

“The rupee’s appreciation against the dollar is only temporary. I see the rupee going back to the 49.50-50.00 levels by December,” said the dealer.

The rupee had depreciated nearly 20 per cent in the current year.

The one-month INR contract in the non-deliverable forward (NDF) market was quoted weaker than the spot rate at 48.08 / 48.25 to the dollar. The total open interest on NSE currency futures platform today was noted at 1,59,515 contracts with maximum open interest of 1,28,936 contracts seen in the USDINR 26Nov2008 futures contract.

The forward premia hardened across all tenors. The 6M forward premia was at 2.11 per cent.

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