Monday, November 29, 1999

Rupee retreats from 4-week high on dollar demand

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The rupee tumbled from a four-week high on Wednesday, as dollar demand from crude refiners to meet import commitments erased gains from the euro's recovery and firm domestic share prices.The partially convertible rupee ended at 46.55/56 per dollar, off an intraday peak of 46.2850, its strongest since May 20, but steady from Tuesday's close."With oil rising towards $80 a barrel, I anticipate more buying pressure from oil companies in the coming days," said a senior dealer with a foreign bank, adding he expects the rupee to trade in a broad 46.50 to 46.70 range on Thursday.Oil, India's biggest import rose above $77 a barrel on Wednesday to reach the highest level since mid-May, tracking a recovery in global markets as risk appetite returns on easing worries about Europe's economy.The rupee strengthened earlier in the day mirroring the euro's rise versus the dollar. The single currency touched a two-week high against the dollar.Higher local stocks had also lifted sentiment. The benchmark BSE Sensex index rose for the sixth straight day, its biggest winning streak in nine months, on signs of improved risk appetite.Foreign fund moves into and out of the stock market are a key determinant of the rupee's fortunes. So far in June, foreigners have bought a net $439.3 million worth of shares, after dumping around $2 billion in May.The funds are net buyers of about $5 billion so far in 2010.One-month offshore non-deliverable forward contracts was at 46.60, 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 MCX-SX ended at 46.61 and 46.6050 respectively, with the total traded volume on both exchanges at $6 billion.(Editing by Malini Menon)(For more business news on Reuters India click
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