|
Tuesday October 6, 10:40 AM
|
|
Rupee at 4-mnth peak on dollar drop; shares eyed
MUMBAI (Reuters) - The rupee extended gains into a third day on Tuesday, rising to a four-month peak boosted by the dollar's fall versus major units and a higher start to the domestic sharemarket.
At 10:20 a.m. (0450 GMT), the partially convertible rupee was at 47.19/20 per dollar, off a high of 47.16, its highest since June 5 and 0.7 percent above its pervious close of 47.525/535.
"With the dollar losing steam and expectations of it falling further, the rupee is expected to move higher. 47.20 is a support we have to look for and after that 46.80 is a very strong support," said Ashtosh Raina, head of forex trading at HDFC Bank.
"Breaking of 46.80 will take a while and we will have to see for central bank comfort there," he added.
The dollar fell on Tuesday due to a newspaper report saying Gulf Arab states were in secret talks with Russia, China, Japan and France to replace the U.S. dollar with a basket of currencies in the trading of oil.
Dealers said there was a lot of dollar selling due to the prevailing arbitrage opportunity between the non-deliverable forwards and the spot market. Traders sold dollars in the spot and bought them back in the NDF's where they were cheaper.
The one-month NDF was quoted at 47.14/24 per dollar, stronger than the onshore spot rate, providing a good arbitrage opportunity for banks having access to both these markets.
Shares rose early tracking rise in world markets, but were trading down 0.5 percent, as investors turned wary about the sustainability of the economic recovery.
Foreign fund investments into local shares which are a key factor determining the rupee's fortunes have bought $12.7 billion worth of stocks so far in 2009, after having dumped more than $13 billion last year.
The rupee has gained 3.2 percent this year and is up 10.6 percent from its record low of 52.2 hit in early March.
(Reporting by Swati Bhat; Editing by Jarshad Kakkrakandy)
(For more news on Reuters Money click http://www.reutersmoney.in)
