Rupee closes at new 9-year peak of 40.49/50 a dollar | business | Hindustan Times
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Rupee closes at new 9-year peak of 40.49/50 a dollar

business Updated: May 29, 2007 22:47 IST

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The rupee on Tuesday closed at a new nine-year peak of 40.49/50 against the US currency on the back of firm equity markets amid absence of dollar demand.

In quiet trade at the Interbank Foreign Exchange (forex) market, the domestic unit opened higher at 40.48/50 a dollar from Monday's close of 40.5100/5150 a dollar.

Later, it touched a high of 40.41 a dollar following firm equity markets, expecting more capital inflows and absence of dollar demand.

However, the rupee then dropped to a low of 40.54 due to fresh month-end dollar demand from oil refinery companies. Finally, it closed at 40.49/50 per dollar, still slightly higher than the previous close.

Expectations of intervention by the central bank also partly weighed on the rupee sentiment. Some state-run banks were said to be buying dollars on behalf of the Reserve Bank of India (RBI), as inflation eased to a eight-month low of 5.27 per cent in the week ended May 12. FII inflows are expected to touch USD 4.0 to 5.0 billion by the end of June 2007.

The benchmark Sensex closed up by over 110 points today, completing a three-session gaining streak. There were no major cues from overseas as most of the markets were closed yesterday. The local currency Monday breached the 40.50 mark and hit 40.29 level, its highest since May 13, 1998.

Meanwhile, the RBI fixed the reference rate for the US currency at Rs 40.45 per dollar and for the single European unit at Rs 54.37 per euro.

The rupee premiums on forward dollar ended remarkably higher due to fresh paying pressure from banks and corporates.

Benchmark six-month forward dollar premiums payable in October ended at 60-1/2 - 62-1/2 paise, higher from 52 - 54 paise on Monday and the far-forwards maturing in April closed up at 120-1/2 - 122-1/2 paise from 113-1/2 - 115-1/2 paise previously.

In cross currency trades, the rupee reacted downwards against the British Sterling, the euro and the Japanese Yen.

The Indian unit eased against the sterling to close at Rs 80.38/40 per pound from overnight close of Rs 80.33/35 per pound and moved down against the single european currency to Rs 54.61/63 per euro from last close of Rs 54.50/52 per euro.

The rupee softened against the Japanese unit and ended at Rs 33.34/36 per 100 yen from previous close of Rs 33.31/33 per 100 yen.