RTRS: Rupee retreats from 7-wk low as shares recover
(Reuters) - The rupee retreated from its lowest level in 7 weeks on Thursday as a late pull-back in shares and a reversal in the dollar's gains versus majors prompted banks to liquidate long positions in the U.S. unit.
The partially convertible rupee closed at 45.53/54 per dollar, off the day's low of 45.71 -- its weakest since Dec. 1, and 0.2 percent below Wednesday's close of 45.45/46.
"Bids were seen from oil firms and with weak equities, the rupee touched over 1 month lows in the earlier part of the session," said Vikas Chittiprolu, a senior foreign exchange dealer with Andhra Bank.
"However, smart recovery in equities and the euro's rise against the dollar helped the rupee rise from its lows in late trade," he added.
The BSE Sensex pulled back from an early slide and climbed 0.4 percent on Thursday as investors covered short positions in financial stocks that had fallen sharply over the past three weeks.
Foreign funds have sold shares worth a net $717 million so far in 2011 until Wednesday after buying a record $29.3 billion in 2010.
"There was some long dollar liquidation triggered tracking the euro's gains and shares recovery," said Rohan Naik, head of foreign exchange trading at Standard Chartered Bank in Mumbai.
"Rupee should be rangebound in the near term," he added.
The euro edged up against the dollar on Thursday on sovereign demand to sell the U.S. currency as the month-end approaches, while investors hoped for progress on finding a sustainable way to ease the euro zone's debt crisis.
The dollar index, a measure of the greenback's performance against six major currencies, was down 0.1 percent at 78.566 points when the rupee market closed. The index had been up as much as 0.3 percent earlier.
Banks have not been witnessing major dollar inflows into a share sale by Tata Steel, currently under way.
Tata Steel, the world's seventh-largest steelmaker, has raised 5.08 billion rupees ($111.4 million) from anchor investors and aims to raise as much as 34.77 billion rupees from the issue that closes on Friday.
Traders said dollar demand from oil firms, the largest buyers of dollars in the domestic currency market, also weighed on the rupee.
One-month offshore non-deliverable forward contracts were quoted at 45.85, weaker than the onshore spot rate.
In the currency futures market , the most traded near-month dollar-rupee contracts on the National Stock Exchange and the United Stock Exchange closed at 45.58. while those on the MCX-SX at 45.5825.
The total traded volume on the three exchanges was an average $6.4 billion.
