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Friday, July 9, 2010

Rupee rises on stock gains, weak dlr overseas


Click to enlarge photo

MUMBAI (Reuters) - The rupee rose on Friday on weak dollar overseas and better local shares, but some dollar demand for a Muslim religious pilgrimage prevented a sharp rise in the Indian unit against the dollar, dealers said.

At 10:44 a.m. (0514 GMT), the partially convertible rupee was at 46.7650/7750 per dollar, stronger than Thursday's close of 46.8525/8625.

"There is some dollar demand in the market by the Haj pilgrimage committee. They buy two-three month forward contracts to hedge their exchange risk. This outward remittance will happen in September or October," said R.K. Gurumurthy, head of treasury at ING Vysya Bank.

He expects a demand of $50 million -$75 million from the Haj committee in the day.

Dealers expect the rupee to move in the band of 46.65-46.85 per dollar in the day.

"There may not be a sharp appreciation in the rupee as the market is sitting under net long dollar position," a private bank dealer said.

The rupee tracked other Asian currencies which also rose on a weak dollar overseas and strong equity markets.

Most Asian currencies were strong versus the dollar. The index of the dollar against six majors was down 0.01 percent.

The euro held near two-month highs on Friday, while the yen was under pressure as investors cut long positions and veered towards high-yielding currencies on improving risk appetite.

The BSE Sensex (^BSESN : 17833.54 +181.81) was trading 0.98 percent higher in early trade, tracking gains in the world markets.

"The overall view on the rupee has changed. It is no longer expected to rise sharply given that eventually, rate hike won't be positive for stocks," Gurumurthy added.

Fuel inflation accelerated in late June and a recent hike in fuel prices kept the case for the Reserve Bank to top its last Friday's rate hike when it reviews policy on July 27.

One-month offshore non-deliverable forward contracts were quoted at 46.93, weaker than the onshore spot rate.

In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange (^NSEI : 5352.45 +55.6) and MCX-SX were both at 46.8850, with the total traded volume on the two exchanges at about $841 million.

(Reporting by Suvashree Dey Choudhury; editing by Malini Menon)

(For more business news on Reuters India click http://in.reuters.com)

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