The rupee ended at 50.6950/7050 to the dollar after touching 50.51, a level last seen on March 21, according to Thomson Reuters data. It closed at 50.87/88 on Friday, the last day of the fiscal year 2011/12 during which it hit a record low of 54.30 on Dec. 15.
The Indian foreign exchange market was shut on Monday for the annual closing of bank accounts.
"Stronger Asian currencies, and positive equities pushed the rupee higher, and the dollar was weaker against the major currencies, which also helped," said Hemal Doshi, chief financial strategist at Geojit Comtrade.
World stocks rose for the third straight day as investors' appetite for risky assets improved following solid US and Chinese manufacturing data, and the Indian main stock index closed 0.7 percent higher. "There was some dollar selling by software exporters, which also aided the rupee," a trader with a foreign bank said, adding the unit is likely to move in a 50.40 to 50.80 band in the near term.
Dollar demand from oil importers pulled the rupee off its intra-day high. Oil is India's largest import item and oil refiners are the biggest buyers of dollars in the local market.
A widening current account deficit is also likely to keep the rupee under pressure. India's balance of payments fell into negative territory in the December quarter for the first time in three years.
Traders do not expect sharp volatility in the rupee in the holiday shortened week. The market is shut again on Thursday and Friday for local holidays.
The one-month offshore non-deliverable forward contracts were at 51.08. In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and on the United Stock Exchange all ended around 50.9, on a combined volume of $3.4 billion.
(Source- http://economictimes.indiatimes.com)
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