Rupee extends gains for the fourth straight day

Since August 28, the rupee has appreciated by 11.3%. On that day, it had touched an all-time low of 68.85 a dollar, due to heavy month-end demand from importers

The rupee rose for a fourth straight day on the back of dollar inflows from foreign institutional investors. However, the gains were limited due to dollar buying by nationalised banks on behalf of oil marketing companies during the closing session.

The rupee ended at a three-month high of 61.09 a dollar, compared with Thursday’s 61.12. It had closed at 61.04 on December 10. It opened on Friday at 61.02 and during intra-day trade, touched a high of 60.95, a level close to August 8, when it had closed at 60.86 a dollar.

Since August 28, the rupee has appreciated by 11.3 per cent. On that day, it had touched an all-time low of 68.85 a dollar, due to heavy month-end demand from importers.

“Next week, the appreciation bias might continue, on the back of dollar flows in domestic markets, dollar sales by exporters and positive sentiments due to a narrowing current account deficit (CAD),” said N S Venkatesh, chief general manager and head of treasury at IDBI Bank. Venkatesh expects the rupee to trade in the range of 60.75-61.80 a dollar next week.

Finance Minister P  Chidambaram said on Friday that he expected the CAD for the year to come  below $40 billion, from his $45-bn estimate in the interim Budget.

CAD narrowed to a fresh four-year low as gold imports cooled, offering a potential boost for the rupee. The deficit was $4.2 billion in October-December quarter, compared with $5.2 billion for the previous  quarter, RBI said in a statement earlier this week.

However, currency dealers will keep a close watch on US non-farm payroll data for February to be released later during the day. "The data may change the fate of dollar and it may start strengthening against other global currencies," said a currency dealer with a state-run bank.