Rupee gives up early gains

The rupee ended off highs against the dollar as most banks bought the greenback for importers to meet their month-end requirements on Wednesday, dealers said.

The Indian unit ended at 49.67 to a dollar compared with 49.88 on Monday. It had risen to an intraday high of 49.59 to a dollar on Wednesday.

“Volumes in the market were half of the usual. There was not much depth in the market on Wednesday,” said a dealer at a state-owned bank. “Companies bought dollars to meet their month-end demand on Wednesday and limited the rupee’s rise. There was also defence-related demand in the market on Wednesday,” said a dealer at a private bank.

 

“Many nationalised banks were buying dollars to make some defence-related payments,” said a dealer at a state-owned bank.

According to dealers, a very large state-owned bank bought around $100 million at 49.60-49.75 to a dollar for defence-related purchases, while a South-based, state-owned bank bought around $60 million at 49.65-49.82 to a dollar to make the same payments.

“We bought around $60 million from two large UK banks for a public sector company at 49.75-49.80,” said a dealer at a South-based, state-owned bank. On Wednesday, the rupee opened firm with a gap of around 30 paise as most banks sold the greenback noting a rise in global share indices.

On Tuesday, the Dow Jones Industrial Average ended up around 11 per cent, while key share indices rose nearly 0.50 per cent on Wednesday.

“... banks also unwound their long dollar positions looking at shares across the globe, which had risen sharply giving some positive cues,” said a dealer at a UK bank.