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Rupee ends at 26-month high, outlook firm
June 10, 2003 18:44 IST
The rupee ended at a 26-month closing high on Tuesday, breaching the key 46.8 per dollar mark on the back of robust trade and foreign fund inflows and the greenback's overseas weakness, traders said.
The rupee finished at 46.7925/8000 to a dollar, up 0.19 per cent from Monday's close of 46.88/89. It last closed higher than this level on April 11, 2001, at 46.6850/6900.
"Two crucial factors helped the rupee climb unchecked -- the lack of central bank support (for the dollar) and near zero demand for the dollar," said a senior dealer at a state-run bank.
Analysts said the rupee, which is undervalued by nearly three percent on a trade-weighted basis, had broken past the crucial technical dollar support level of 46.80, signalling further gains.
The rupee has now risen more than 2.54 per cent against the dollar in 2003 and stretched its gains to 4.82 per cent since it hit a record closing low of 49.0450/0550 on June 3, 2002.
Traders said dollar inflows from foreign funds and exporters anxious about renewed dollar bearishness overseas had helped keep the greenback depressed.
"Foreign banks which have been channelling FII (foreign institutional investor) inflows in recent sessions were again active," said the state-run bank dealer.
Foreign funds, which bought $655.2 million of assets in May, have stepped up purchases of Indian stocks in recent sessions betting that a good monsoon would spur domestic demand and buying treasury bills for their attractive yields.
They have increased their holdings of Indian assets by $155.8 between June 1 and 9.
Rupee premiums on the forward dollar also eased, tracking the spot rupee's appreciation, before some late profit-booking took them off session lows.
The annualised six-month forward premium finished seven basis points lower at 2.12 per cent but off the day's trough of 2.08 per cent.