MUMBAI: The Indian rupee strengthened on Tuesday, tracking the dollar index’s drop to a 1-month low alongside gains in domestic equities.
The partially convertible rupee ended at 44.67/68 per dollar, up 0.2 per cent from Monday’s close of 44.755/765. During the day, the rupee moved in 44.6550-44.8250 range.
The dollar fell to a one-month low against a basket of currencies on Tuesday and a record low against the Swiss franc after a Chinese official said the greenback would continue to weaken versus other major currencies.
“Inflows outpaced importer demand today, but I think the dollar will be supported around 44.60-44.65 unless the euro breaks the $1.47 level,” said Hari Chandramgathan, a senior foreign exchange dealer with Federal Bank .
Traders expect the rupee to move in a wide band of 44.50-44.90 this week, but said a lot depended on how local shares and the euro moved.
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The common European unit had been at $1.4607 and the index at 73.845 points at the same point on Monday.
Indian shares shrugged off a sluggish start and climbed for a second day on Tuesday, powered by energy major Reliance Industries and software services bellwether Infosys Technologies .
Foreign funds have bought $212 million worth of local equities so far in June after being net sellers of $1.16 billion in May.
Intraday, the rupee’s rise was tempered by importer dollar demand, primarily from local oil refiners, traders said.
India’s biggest import item is crude oil and domestic oil refiners are the largest dollar purchasers in the local forex market.
The one-month onshore forward premium rose to 26.25 points versus 24 points at Monday’s close. The three-month was at 75.50 points against 75.25 at the previous close and the one-year was at 272.75 points versus 276.25.
One-month offshore non-deliverable forward contracts were quoted at 44.88, weaker than the onshore spot rate.
In the currency futures market , the most traded near-month dollar-rupee contracts on the National Stock Exchange and the MCX-SX were each at 44.8575 while the United Stock Exchange contracts were at 44.8525. Total volume was $7.47 billion.