Re ends stronger versus dollar

Rupee on Wednesday ended at 40.9250/9350 against dollar, stronger by five paise from previous close of 40.9750/9850, in anticipation of increased inflows amid some dollar demand from oil refiners.

In dull trade at the Interbank Foreign Exchange (forex) market, the local currency moved in a narrow range of 40.90 and 40.94 after resuming firm at 40.90/91 per dollar.

There was consistent dollar buying in the exchange market, prompted by soaring crude oil prices, which hovered around $74 a barrel in Asian trade, forex dealers said.

They said inflows and outflows was nearly matching as Foreign Institutional Investors (FIIs) stepped up activity in equity markets in the last three days after a massive pull out in August. FIIs pumped in $ 298.20 million on August 31 and September 3 in the equity.

Meanwhile, analysts expect India's trade deficit to widen in coming months as the oil import bill increases due to high crude prices and the stronger rupee hits exports, which in turn could put pressure on the local currency.

The country's strong economic growth and low inflation rate seemed favourable for the rupee.

The Reserve Bank of India (RBI) fixed the reference rate for the US currency at Rs 40.94 per dollar and for the single European unit at Rs 55.59 per euro.

The rupee premium on forward dollar reacted downwards on fresh receiving by exporters.

The benchmark six-month forward dollar premiums payable in February ended at 21-1/2 - 23 paise, slightly lower from 23 - 25 paise on Tuesday and the far-forwards maturing in August ended sharply down at 52 - 54 paise from 66 - 68 paise previously.

In cross-currency trades, the rupee also appreciated against the British sterling, the euro and the Japanese Yen.

The local unit bounced against the British Sterling to end the day at Rs 82.26/28 per pound from yesterday's close of Rs 82.50/52 per pound and also improved against the single European currency to Rs 55.58/60 per euro against previous close of Rs 55.66/68 per euro.

The rupee strengthened against the Japanese Yen to Rs 35.39/41 per 100 yen from last close of Rs 35.49/51 per 100 yen.