MUMBAI: The Indian rupee strengthened on Thursday ahead of a long weekend, tracking higher regional units, but further gains were expected to be
difficult after the stock market ran into resistance. At 10:40 a.m. the partially convertible rupee was at 46.75/76 per dollar, off an high of 46.72 but still 0.25 percent stronger than its previous close of 46.87/88. Financial markets will be closed on Friday and Monday for holidays.
"It being a thin market, rupee is not strengthening as it should have tracking the equity market," said V. Kumar, chief foreign exchange trader with State Bank of Travancore. "But the overall trend is bullish for rupee in the near term, tracking equity market and dollar's loss yesterday, subsequent to data releases. It should trade in a band of 46.65-46.80 today," he added. Indian shares rose 0.7 percent in early deals but then gave up all their gains to be flat, after they had jumped 3.2 percent on Wednesday to their highest close since mid-October.
All other Asian units were also stronger compared to the dollar. The index of the dollar against six majors was down 0.1 percent. The dollar hovered below a three-month peak against the euro and two-month high on the yen on Thursday as its rally stalled following news of a surprise drop in US home sales that dented optimism about the economy.
Dealers said some month-end dollar demand from refiners and importers was likely to weigh on the rupee later in the session ahead of the long weekend. One-month offshore non-deliverable forward contracts were quoted at 46.73/83, little changed from the onshore spot rate. In the currency futures market, the most traded near-month contracts on the National Stock Exchange and MCX-SX were both quoting at 46.7575 respectively, with the total traded volume on the two exchanges at about $570 million.
Source : The Economic Times