Re reverses 4-day losing trend, up 53 p on Spanish bailout

The rupee resumed slightly higher at 55.90 per dollar as against yesterday's closing level of 55.92 per dollar at the Interbank Foreign Exchange (Forex) market on weak Asian markets after Chinese import growth slowed in June.

However, the rupee changed track and shot up to day's high of 55.33 per dollar in tune with the surge in equity markets triggered by Eurozone finance ministers ratifying a deal to aid ailing Spanish banks.

The dollar's weakness against the 17-nation euro, which steadied at USD 1.2313 a day after striking its lowest point in two years, boosted the sentiment in favour of the rupee.

Foreign Institutional Investors (FIIs) who bought stocks worth Rs 606 crore today, as per provisional data, also supported the rupee's rise as the currency ended at 55.39, clocking a gain of 53 paise or nearly 1 per cent.

The Indian stock market benchmark Sensex ended higher by 226 points or 1.30 per cent to four-month high.

Forex dealers said banks and exporters sold dollars after it weakened in international markets.

"The biggest positive which helped the rupee gain over 50 paise today was the Eurozone agreeing on the terms for bailout of Spanish banks. The Pound appreciated against the dollar ...FII money also came in," said N S Venkatesh, Head of Treasury, IDBI Bank.

Experts said if euro continues to trade strong against the dollar, rupee will consolidate.

"I think if the euro continues to trade in the 1.18 to 1.23 range to the dollar as is the expectation, we should see rupee consolidate in the 53-55 range a dollar in the short term," said Moses Harding, Head of ALCO and Economic and Market Research, IndusInd Bank. (MORE)