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Rupee snaps four-day gaining streak

BS Reporter  |  Mumbai 

The snapped four-day gains to close 0.2 per cent lower on Wednesday due to by traders and from oil marketing companies.

The Indian currency touched an intra-day high of 54.18 before closing at 54.50 a dollar, 12 paise lower than the previous close. “Lack of dollar supply added pressure to the exchange rate,” said a dealer with a public sector bank. Markets in the US were shut on Wednesday due to Independence Day. Moreover, oil prices marched up. This increased the dollar demand of oil companies on Wednesday.

Speculations that the government may scrap withholding tax of 20 per cent levied on foreign institutional investments in government bonds helped the stage a recovery in the second half of the trade.

The had appreciated by five per cent after recovering from an all-time low of 57.33 against the dollar last week. The recovery was attributed to foreign fund inflows for investment in Indian debt papers for which limits were auctioned by the capital markets regulator on Wednesday. There were net inflows of Rs 239 crore in Indian equities on Wednesday, according to data from the Bombay Stock Exchange. In all, FIIs have pumped in over Rs 3,500 crore since Friday.

But, traders were wary of volatility in the currency’s exchange rate. “However, we have seen the correcting heavily due to its oversold position in the market. Next support for the is seen at 53.50 per dollar,” said in its report.

The has lost over seven per cent against the greenback since the start of the current financial year, mainly because of increased risk aversion globally.

However, there are renewed hopes that growth supportive policy measures may help the

First Published: Thu, July 05 2012. 00:41 IST
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