Mumbai: Ending a two-day falling trend, the rupee on Tuesday recovered by seven paise to close at 60.13 against the US dollar on the back of a sharp rise in local equities following a drop in global crude oil prices. Fresh dollar selling by exporters and a weak dollar overseas also aided the rupee rise while sustained capital outflow restricted the surge, a forex dealer said.
Concerns over the current macroeconomic situation after recent spike in global crude oil arose due to Iraq's crisis, lessened as crude prices dropped giving some relief. This led to sharp rise in domestic equities, giving respite to the investor fraternity and also helped the rupee recovery.
At the Interbank Foreign Exchange (Forex) market, the local currency commenced higher at 60.13 a dollar from last close of 60.20. It was trapped in a narrow breadth of 60.07 and 60.18 before concluding at its opening level of 60.13, a net rise of seven paise or 0.12 per cent.
In the previous two sessions, it fell by 12 paise. The Indian benchmark S&P BSE Sensex today snapped its four-session losing streak and shot up by 337.58 points, or 1.35 per cent. FIIs had pulled out Rs 214.49 crore yesterday, as per provisional data with stock exchanges.
The dollar index, a gauge of other global major rivals, was down by 0.06 per cent. Pramit Brahmbhatt, Veracity Group CEO said: "Rupee traded range bound to slightly strong. Some of the bluechip shares gained which helped equities to close up by over one per cent. "Dollar index is also trading weak which is further helping rupee to trade strong. The trading range for the spot rupee is expected to be within 59.80 to 60.60."
Oil prices slipped on receding fears that the crisis in Iraq could result in a major supply disruption. US benchmark West Texas Intermediate fell 54 cents to $105.63 per barrel and Brent eased 63 cents to $113.69 in mid-session.
"The domestic currency is seen trading in a range with the bearish bias against the backdrop of weakening dollar index despite good set of data coming from the US. Strong opening in the local equity markets and the weakening dollar index was seen restricting losses in the rupee," said Abhishek Goenka, Founder & CEO, India Forex Advisors.
The premium for forward dollar softened on stray receipts by exporters. The benchmark six-month premium payable in November eased to 223-225 paise from overnight close of 224-226 paise. Far-forward contracts maturing in May, 2015 also ended slightly down at 470.5-472.5 paise from 471-473 paise.
The Reserve Bank of India fixed the reference rate for dollar at 60.1050 and for the euro at 81.7520. The rupee improved further against the pound to 102.19 from 102.45 previously while recouped to 59.07 per 100 Japanese yen from 59.14. However, it remained weak to end at 81.93 per euro from 81.81 on Monday.
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