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January 30, 2001
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Rupee firms up to 46.43/$; quake worries recede

The Indian rupee closed 6 paise stronger against the US greenback at Rs 46.42/43 on improved dollar supply from foreign funds and domestic exporters, coupled with absence of follow-up demand at the interbank foreign exchange market on Tuesday.

The rupee opend at Rs 46.4850/4900, gradually moved upwards on strong dollar inflows mainly from foreign institutional investors and exporters, while the import demand remained very thin.

The Indian unit, which witnessed only one way upward movement throughout the day, closed at Rs 46.42/43, gaining over six paise from the previous day's close of Rs 46.4850/4950.

Intra-day report

The Indian rupee firmed against the dollar on Tuesday as concerns eased over the economic impact of Friday's devastating earthquake in Gujarat.

The rupee bounced back, firming to 46.465/472 per dollar from 46.485/495 at Monday's close.

The rupee fell at the opening on Monday but recovered to close little changed as the quake did not prompt a surge in demand for dollars.

But over time, the rupee is expected to firm as quake aid flows into India, boosting the supply of dollars and India's foreign reserves, currency traders said.

The government has approached the World Bank for $1.0 billion and the Asian Development Bank for $500 million in reconstruction aid.

The World Bank said on Monday it will make available about $300 million immediately for emergency relief work.

Indian government bond prices also rebounded after dropping sharply on Monday amid concern over increased borrowing to finance the reconstruction of quake-devastated areas.

Yet dealers said concern remains over the impact on the government's fiscal deficit as it remains unclear how much will be spent on reconstruction and how rebuilding will be paid for.

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