Rupee gains on hopes of renewed foreign inflows

By Subhadip Sircar

MUMBAI (Reuters) - The rupee rose on Thursday, snapping two sessions of losses, on hopes of renewed foreign fund inflows on the back of a buoyant stock market, which gained for a fourth straight session.

Foreign funds have poured in over $500 million in equities in the last four sessions, according to latest data from the capital market regulator.

The inflows will bring some relief to the currency after they seemed to taper off in the early part of this month.

Dealers also expect the rupee to get some support from inflows related to the stake sale by Jet Airways to Gulf carrier Etihad Airways.

The Gulf carrier will take a 24 percent stake for $379 million.

The rupee's gains were however kept in check by dollar demand from importers, particularly of oil, which normally picks up during month-end, dealers said.

"Initially market sold dollar on expectation of inflows and stronger euro and stocks. But good bids from oil and corporates kept the market rangebound," said Hari Chandramgethen, chief foreign exchange dealer at South Indian Bank.

He expects the rupee to trade in a range of 53.80-54.80 to the dollar in the near term.

The rupee was also helped by the dollar's weakness against the euro, hurt by a batch of soft data that have raised concerns about the pace of economic recovery in the United States.

The partially convertible rupee closed at 54.21/22 per dollar, stronger than its close of 54.38/39 on Tuesday. Financial markets were closed on Wednesday for a local holiday.

Despite talks of early elections, Finance Minister P. Chidambaram said on Wednesday the government would take more steps to revive growth in the next two-four months.

The Indian government pitched for a rating upgrade on Thursday at a meeting with ratings agency Standard & Poor's, a top finance ministry official said, citing steps taken by it to control a high fiscal deficit and revive investments.

In the offshore non-deliverable forwards, the one-month contract was at 54.38, while three-month was at 54.96.

In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed around 54.2550, with a total traded volume of $5.8 billion.

(Editing by Subhranshu Sahu)