Friday August 28, 06:40 PM

Rupee up for 2nd day as exporters sell dlrs

By Swati Bhat

MUMBAI (Reuters) - The Indian rupee rose for a second day on Friday, extending its recovery from a slip to 1-½ month lows as exporters decided it was a good time to take profits on the dollar's recent gains and as the sharemarket extended its rise.

The partially convertible rupee closed at 48.65/66 per dollar, half a percent stronger than Thursday's close of 48.91/92. The rupee had dropped to 49.05 during trade on Thursday, its weakest since July 13.

Despite Friday's gains, the rupee still ended slightly down on the week, a third successive weekly fall.

"Exporters are selling majorly, and even expectations of inflows from upcoming initial public offerings is cheering sentiment," said Ashtosh Raina, head of foreign exchange trading, at HDFC Bank.

"The rupee should remain strong on IPO inflows, 48.20 is the next target. We will see where it goes from there, as there is good dollar demand in the market as well," Raina said.

There have been large inflows for recent initial public offerings by Adani Power and NHPC, as well as broader buying of shares.

Shares rose 0.9 percent on Friday, a seventh successive rise that took them to just below their highest close in 2009.

Foreign funds have bought a net $7.8 billion of shares in 2009, helping the rupee gain from a record low of 52.2 in early March. Last year net outflows of more than $13 billion had pushed the rupee down more than 19 percent.

One-month offshore non-deliverable forward contracts were quoting at 48.71/81, weaker than the onshore spot rate.

In the currency futures market, the most traded near-month contracts on the National Stock Exchange (^NSEI : 4941.75 -63.8) and MCX-SX closed at 48.7475 and 48.75 respectively, with the total traded volume on the two exchanges at about an average $1.6 billion.

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