Re strides to 3-year peak at 45.89/$

Maintaining a firm trend for the second straight session, the rupee strode to a 3-year peak against the US currency on Tuesday, backed by sustained robust trade and investment inflows in fairly active trade at the interbank foreign exchange market.

Breaching yet another crucial level of 45.90-dollar, the rupee climbed to a high of Rs 45.87/88 per dollar, before settling at the close to Rs 45.88/89, a nearly three-year high, despite a feeble attempt by the central bank to contain its gains, dealers said.

The rupee had last ended at better levels at Rs 45.7800/7850 per dollar on September 15, 2000.

The domestic currency has gained eight paise from overnight closing levels of Rs 45.9500/9550 and nearly 15 paise in the current week.

Opening on a firm footing at Rs 45.93/94 per dollar, the rupee initially rose to Rs 45.92/94, but met strong resistance at these levels.

Once it broke through the 45.90-dollar barrier in late afternoon trade, it shot up to Rs 45.87/88, minutes before the closing bell, before settling at Rs 45.88/89, a dealer gave a general description of today's rupee trend.

"A feeble attempt by the Reserve Bank of India to arrest its gains at the fag end, had little impact," he added.

Persistent heavy trade and capital inflows continued to give the rupee strong underlying support in the absence of adequate dollar demand from corporates and importers.

A lingering weak dollar overseas, also contributed to the rupee's sharp gains, bankers said.

RBI fixed the reference rate for the US currency at Rs 45.93 per dollar and the single European unit at Rs 52.20 per euro from Rs 45.96 and Rs 51.84 respectively on Monday.

There was overall good dollar inflows so far this week. Apart from export proceeds, there was heavy inflows from foreign institutional investors.

FII's pumped in $ 89.2 million in the equity market between August 1 and 7.

In cross currency trades, the rupee reacted downwards against both the euro and British sterling, reflecting the dollar's fall against these units.

The domestic currency ended lower against the single European unit at Rs 51.97/99 per euro from Rs 51.79/81 on Monday and dipped against the sterling to end at Rs 73.57/59 per pound from Rs 73.48/50 per pound.