MUMBAI: The Indian rupee rose to a two-month high on Monday on robust dollar sales from corporates, with gains in local shares and the euro also supporting.
“The rupee has strengthened because of the inflow. I expect it to appreciate further this week. Risk is back in the market,” said Pramod Patil, senior forex dealer at State Bank of Mauritius.
The partially convertible rupee ended at 44.4250/44.4350 per dollar, 0.4 per cent stronger than Friday’s close of 44.5825/5925, after rising as much as 44.3525, a level last seen on May 3.
“The euro came down a little bit, but it is not breaking the $1.45 figure,” a forex trader with a public sector bank said.
“I think 44.20 should be a good support level (for the rupee), but if it breaks 44.20, then we could head to 43.95.”
The euro eased from a one-month high against the dollar after Standard Poor’s said a debt rollover plan being considered for Greece may put the country into selective default, although solid support at lower levels is likely to check losses.
The euro had hit a one-month high of $1.4580 earlier on Monday, as near-term worries that Greece may default and contagion risks eased.
The index of the dollar against six major currencies was down 0.06 per cent at 74.308 points, while the euro was at $1.4514 at the close of domestic trade. The dollar index and the euro were at 74.461 and $1.4492 respectively at the local forex market close on Friday.
Indian shares edged 0.3 per cent higher on Monday, tracking world equities, as risk appetite returned after Greece avoided an early default and on signs China’s economy was not heading towards a sharp slowdown.
Data from Nomura showed foreigners preferred Indian equities the most in Asia in the week to July 1, and pumped in $1.1 billion.
The one-month onshore forward premium was at 26.50 points from 24.50 at last close, the three-month was at 77.25 points from 75, and the one-year was at 260 points from 254.50.
One-month offshore non-deliverable forward contracts were quoted at 44.58, weaker than the onshore spot rate.
In the currency futures market , the most traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were at 44.6050, 44.6100 and 44.6025 respectively. The total volume was at $9.29 billion.