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Friday October 30, 07:51 PM
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Rupee rises as rally hopes trigger dollar sales
By Anurag Joshi
MUMBAI (Reuters) - The rupee closed higher for a second straight day on Friday, erasing earlier losses triggered by a fall in local share prices, as exporters sold dollars expecting a further strengthening of the local unit.
The partially convertible rupee ended at 46.96/97 per dollar, about 0.5 percent stronger than its 47.21/22 close on Thursday, when it touched a low of 47.6250, its weakest since Oct. 5.
It touched an intra-day high of 46.84 on Friday.
"The rupee had weakened in line with the stock market. But, with signs of the rupee's gains seeming sustainable, exporters sold dollars," said a senior dealer with a foreign bank.
Indian shares fell 7.2 percent in October and logged their biggest monthly fall in a year, after they closed 1 percent lower on Friday.
Foreign portfolio inflows into local shares are a key driver of the rupee. Foreigners have bought more than $14 billion of local equities so far this year, after being sellers of more than $13 billion in 2008.
Traders said the customary month-end dollar buying by refiners limited the rupee's gains. Oil is India's biggest import and refiners step up dollar purchases from the currency market towards the end of the month to meet import commitments.
One-month offshore non-deliverable forward contracts were quoted at 46.99/47.09, weaker than the onshore spot rate.
In currency futures, the most traded near-month contracts on the National Stock Exchange (^NSEI : 4941.75 -63.8
) and MCX-SX was at 47.07 and 47.06 respectively, from Thursday's 47.28 and 47.2750.
(Editing by Malini Menon)
(For more news on Reuters Money visit http://www.reutersmoney.in)
