Indian rupee ended almost steady at 63.52

The Indian rupee ended almost steady at 63.52, a mere one paisa lower, against the American unit on alternate bouts of demand and supply of dollars during the week under review.

The rupee resumed higher at 63.45 per dollar — which was also to be the week’s high — as against the last weekend’s level of 63.51 at the Interbank Foreign Exchange (Forex) Market on initial selling of dollars by some banks and exporters.

However, it failed to maintain gains on fag-end dollar demand from banks and importers on the back of firm dollar in the overseas market and fell to a low of 63.8850 before concluding the week at 63.52, showing a minor fall of 1 paisa.

“Oil back at US $60 supports concerns that the ongoing depreciation in rupee against US dollar could gain momentum, in the event of a rate cut,” said Anand James, Co Head Technical Research Desk of Geojit BNP Paribas.

Besides, higher dollar overseas following unexpectedly better US housing data for April, weighed on the rupee.

The minutes of Federal Reserve’s April meeting released showed that the central bank officials doubted they would be ready to raise short-term interest rates by mid-year.

Slow-down in capital outflows, however, restricted the rupee fall to a major extent, a forex dealer said.

After few days of selling, Foreign Portfolio Investors (FPIs) bought shares worth US $2.81 million on the first four days of the week, as per Sebi data.

Meanwhile, the BSE Sensex ended higher by 633.50 points or 2.31% during the week, its third straight weekly rise.

It has gained 277.45 points, or 3.39 per cent, in the three straight weeks. It had last ended at 8,606.00 on April 17, 2015.

Buying was seen mainly in key stocks as second-line shares attracted less buying interest from retail investors and their indices underperformed the Sensex. The BSE Smallcap and the BSE Midcap rose 0.53% and 1.51%, respectively.

Fresh investments by foreign portfolio investors (FPIs) also buoyed market sentiment as they net bought shares worth Rs 230 crore, according to market regulator data.

On the overseas front, most Asian markets ended the week in the positive terrain on signs of fresh investment from Beijing amid a record close on the Wall Street during the week, with prospects of a Federal Reserve rate hike in June evaporating fast.

A strong rise in European markets after the European Central Bank (ECB) proposed that it may “frontload” its one trillion euro bond-buying slightly to account for lower market liquidity in high summer also gave the markets here some comfort.

Back home, next week, the last batch of quarterly earnings, trend in global markets, investment by foreign portfolio investors (FPIs), the movement of rupee against the dollar and crude oil price movement will dictate the trend on the bourses.

The market may remain choppy as traders roll over positions in the futures and options segment from the near month May 2015 to June 2015 series. The May 2015 F&O contracts expire on Thursday, May 28, 2015.

Veracity Group CEO said: “This week, not much action was seen in the currency market. Rupee-dollar pair traded range bound as on one side the local equities traded strong for the week and closed on a positive note, also the foreign fund inflows in the bond market, helped rupee to appreciate and on the other hand dollar index traded strong as a run of mixed US economic data left the market uncertain about its future direction which forced

Rupee to trade weak and eventually it closed near its previous close.”

“Expect rupee to depreciate in coming days, taking cues from month-end dollar demand from oil importers, which may force rupee to trade near the 64.00 levels in coming week. The trading range for the spot USD/INR pair is expected to be within 63.00 to 64.00,” he added.

In the forward market, the premium declined further on sustained receivings by exporters.

Forward dollar premium payable in October fell to 201-203 paise from the last weekend’s level of 212-214 paise and far-forward contract maturing in April also declined to 425.5-427.5 paise from 435-437 paise, previously.

The RBI fixed the reference rate for the US dollar at 63.5728 and the euro at 70.9282 from preceding weekend’s level of 63.5788 and 72.3781, respectively.

The rupee recovered against the pound sterling to end the week at 99.27 from 99.88 previous weekend and also firmed up to 71.00 per euro from 72.18 per euro.

The domestic currency moved up against the Japanese currency to end at 52.52 per 100 yen from preceding weekend’s level of 52.99.

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