News Hour- Rupee post biggest winning streak in over two-and-half months; ends at 55.18 per dollar

MUMBAI: The rupee rose for a third successive session on Monday, its biggest winning streak against the dollar in over two-and-half months, as a recovery in global risk sentiment helped local stocks post strong gains. 

The rupee, which hit a record low of 56.40 to the dollar on Thursday after a string of all-time lows, has since recovered 2.2 percent, helped by a mix of central bank interventions and improved global risk appetite. 

The local unit rose as much as 55.01 to the dollar at one point on Monday, its highest in nearly a week, but month-end dollar demand from oil importers kept further gains in check, dealers said. 

Traders said a move to supply dollars directly to oil importers via a special window would help the rupee, given these investors constitute the bulk of dollar demand in the forex markets. Such hopes were raised last week after central bank governor Duvvuri Subbarao did not rule out such an action. 

"We are seeing a correction in the USD/INR from the overshot 56 levels. However, it is primarily driven by the recent comments from the central bank," said N.S. Paramasivam, chief executive at NSP Forex, a forex consulting firm. 

The rupee closed at 55.185/195 per dollar after ending at 55.37/38 on Friday, as per State Bank of India data. Trading volumes were also muted, with Monday being a public holiday in the United States. 

A move by the government not to pursue any immediate hike in diesel and liquefied petroleum gas prices did not have a major impact as the market had discounted the possibility of such a move after the protests that followed the petrol price hike, dealers said. 

However, a move to supply dollars to oil importers could spur a rally in the rupee to 54 levels in a knee-jerk reaction, traders said, though they doubted whether it could sustain the gains given the steep global risk aversion and continued worries about India's fiscal challenges. 

India's main BSE stock index rose 1.2 percent, helped by buying in financials and blue chips. The one-month non-deliverable forward rate was quoted at 55.54, while the three month was at 56.28. 

In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all ended around 55.22 on a total volume of $6.2 billion.
(Source- http://economictimes.indiatimes.com)