Mumbai, Aug. 26: The rupee maintained its northward journey against the dollar today, finishing at a seven-month high of 48.51/52 per dollar, mainly due to large inflows and easing of border tensions. Last Friday, the Indian currency closed at 48.5400/55 against the greenback.
All eyes are now on when the rupee will breach the 48.50 mark, with some dealers expecting that it may be as early as tomorrow with dollar inflows remaining strong. The rupee had last finished around today’s closing level on January 30.
Dealers here said that nationalised banks, acting on behalf of the Reserve Bank of India (RBI), today restrained the rupee past 48.50 by buying dollars.
“It is unlikely that nationalised banks will be able to stem the surge in the value of the rupee and the currency is now set to breach the 48.50-mark,” an analyst with a private sector bank said.
The central bank has been mopping up the greenback from the market, which has resulted in the forex reserves swelling beyond the $ 60-billion mark.
Today’s trading saw the rupee open stronger against the US currency following strong dollar sales by exporters and bunched up weekend inflows. Opening at 48.51/52, the Indian currency however, slipped from this level to 48.5150/5250 per dollar in late morning deals due to demand from state-run banks, believed to be emanating from the central bank.
The rupee also came under late pressure on Friday on fears of fresh tensions between India and Pakistan following the latter’s accusation of India bombing a post in Pak-occupied-Kashmir.
“Bunched up inflows over the weekend and foreign fund inflows gave the rupee a good start. However, this trend could not be maintained due to demand from nationalised banks,” a dealer pointed out.
Sources here added that comments made by RBI governor Bimal Jalan earlier during the day that the Indian currency was appreciating due to higher forex inflows did not affect the market.
The rise in the spot market was mirrored in forwards as well with the six-month forward premium closing lower at 4.04 per cent against 4.11 per cent. On the other hand, one-year premium was at 4.21 per cent over the previous 4.31 per cent.
The Bombay Stock Exchange (BSE) sensitive index ended in the positive territory, thanks to a smart rally staged by a few heavyweights and on fresh buying support from operators that have shifted focus to second-rung counters.
Marked gains in L&T, HLL, Reliance, Telco and Satyam Computer propelled the BSE benchmark 30-share index to close marginally up at 3123.60, as against last Friday’s close of 3119.18, netting a rise of 4.42 points.