The Hindu Business Line : Rupee touches 3-year high, breaches 46 level

THE rupee today scaled a three-year high against the US dollar, breaching the `psychological barrier' of 46 levels, ending at 45.95/96 per dollar, 10 paise stronger compared with Wednesday's close at 46.05/06, amid surplus dollar supplies in the forex market today.

Dealers said the domestic currency surged on the back of a large remittance of $284 million, understood to be the ADR proceeds of Infosys Technologies.

The rupee's sudden appreciation has made market players once again sit up and take notice, as most had formed the view that the currency will remain steady in the near term, and was unlikely to see any sudden sharp gains.

Mr R.V.S. Shirdhar, Asst. Vice-President and Chief Dealer (Money and Forex), UTI Bank, said, "A number of people felt that the recent capping of interest rates on NRE deposits by the RBI is an indication that rupee might be steady in the near term, and there might be some two-way volatility, etc. Now it appears that a major stop has been broken. There is a very good chance that the rupee may appreciate drastically unless the RBI intervenes.

"The dollar supplies in the market too have been very good. Corporates have been rushing to raise ECB's following rumours that the RBI might cap their limits," he said. Although the RBI has been informally urging banks to ensure that importers take forward cover against their foreign currency loans, forex traders are of the opinion, that such price action will once again deter importers from entering the market.

However, a section of the market continues to view the rupee appreciation with a certain amount of circumspection. According to Mr U. Venkatraman, Head Forex and Money, IDBI Bank, the price action on forwards are not corroborating the price action on the spot, and this is something to watch out for.

Forward premia continue to inch up, instead of easing on account of the appreciating rupee. The six-month premium ended today at 2.53 per cent (2.05 per cent), while the one-year segment ended at 2.35 per cent (2.03 per cent). The dollar, which was strengthening against international currency majors, on the back of some positive US economy indicators, is now once again slipping due to some negative data. Therefore, to some extent, rupee's rally may also be on account of this weakening of the greenback, according Mr Venkatraman.

Article E-Mail :: Comment :: Syndication

Stories in this Section
Now you can SMS for a chocolate — Cadbury, BPL Mobile, E Cube tie-up for venture

Jaswant upbeat on economy — But admits to 'pressure points' on Govt finances

Rupee touches 3-year high, breaches 46 level

Star News gets a breather

Daewoo India plant humming again, but when will cars roll out?

Fast-food chains say their fizz is safe

Acordis makes open offer for 20 pc of Century Enka