Rupee snaps 5-day fall as Greece fears recede

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The rupee ended stronger on Monday as investors took comfort from the $1 trillion emergency rescue package aimed at preventing Greece's debt crisis from spreading through the euro zone.The announcement of the rescue plan led to dollar's weakness against major currencies globally and helped the local stock market to rebound.The European Union leaders agreed on a emergency package of $1 trillion to stabilise the euro and euro zone central banks began buying local government bonds to prevent the Greece debt crisis from spreading.Global stocks rallied over 2 percent and emerging stocks gained more than 2.6 percent on Monday. Indian shares ended up 3.4 percent, after five straight days of fall.Most Asian currencies jumped against the dollar. The index of the dollar against six major currencies was down 1.04 percent."Some people were holding long dollar position around 45 level. But once rupee breached 44.95, they started selling those long positions," said a dealer at state-run Union Bank of India.The partially convertible rupee ended at 44.8450/8550, snapping its five-straight days of fall, compared with Friday's close of 45.48/49. The Indian unit moved in a band of 44.82-45.15 during the day."Some importer dollar buying was seen at 44.90 levels," said a dealer at a foreign bank in Mumbai.Last week, the rupee fell 2.5 percent, its biggest weekly fall in 14 months as concerns over Greece's debt crisis hit sentiment in the currency market."Risk appetite is returning as there is increasing assurance on the bail-out package in the euro zone," said a senior dealer at a British bank.The euro rose above $1.3000 against the U.S. dollar on Monday, after touching a 14-month low as policymakers in European Union agreed on a massive rescue package to stabilise the euro and euro zone central banks began buying local government debt.Rupee is expected to open stronger on Tuesday amid confidence on the bail-out package in the eurozone. Dealers expect the Indian unit to touch 44.50 on Tuesday."Earlier there was expectation of cash-dollar shortage. But now the funding risk is over. The fundamental direction of the rupee is to appreciate," the Union Bank dealer said.One-month offshore non-deliverable forward contracts ended at 44.85/95, almost at par with the onshore spot rate.In the currency futures market , the most traded near-month dollar-rupee contracts on the National Stock Exchange ended at 44.9250 and MCX-SX at 44.9200, with the total traded volume on the two exchanges at about $8.07 billion.(Editing by Surojit Gupta)

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