MUMBAI: The Indian rupee gained for a
fourth straight session on Thursday tracking higher regional peers, but
retreated from six-week highs touched in early trade as local shares fell and as
the dollar edged up against majors.
The partially convertible rupee
closed at 45.80/81 per dollar, after trading in a narrow range, to close
marginally above Wednesday's 45.82/83 close. It rose to 45.76 in initial trade,
its strongest since January. 19. "There was decent two-way demand seen in the
market today. We may see a slight depreciation in the rupee tomorrow as there
seems to be a strong resistance around 45.80 levels," an inter-bank dealer with
a foreign bank said. The rupee's gains in early trade were boosted by higher
regional peers.
The South Korean won rose to a two-week high buoyed
by appetite for riskier assets after Greece unveiled fresh austerity measures to
reduce its deficit. However, the euro trimmed its overnight gains against the
dollar, indicating persistent investor doubts over a quick solution to Greece's
mounting debt problems. The index of the dollar against six majors was up 0.1%.
"The gains for the rupee from now on will be shallow with deep
pull-back on reversal in EUR/USD and Sensex," said J. Moses Harding, head of
global markets at IndusInd Bank.
Dealers said a choppy local share
market also weighed as it failed to provide clarity on the direction of capital
flows which are crucial in determining the rupee's fortunes. Shares snapped a
three-day winning streak as weak global markets prompted investors take profits.
Indian onshore dollar premiums edged up slightly and are expected to gradually
rise further as cash in the system gets drained on corporate advance tax
outflows due around March 15, dealers said.
The one-month onshore
forwards were quoted at a premium of 11.25 points, up from 10.75 points at close
on Wednesday. Early gains in the rupee prevented premiums from spiking further.
"Nothing much is happening really but guess the market should move
higher after March 15 due to advance tax outflows which will result in liquidity
tightness. That should push up premiums gradually," said Nitesh Kumar, an
interbank dealer with Development Credit Bank.
"The rupee looks
strong, with a resistance at the 46 figure while the target is 45.40". One-month
offshore non-deliverable forward contracts were at 45.82/92, little changed from
the onshore spot rate. In the currency futures market, the most traded
near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX
closed at 45.8950 and 45.8925 respectively, with the total traded volume on the
two exchanges at about $4.8 billion.
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