Mumbai, Jan 24: The rupee today moved higher to sub-50 level for the first time in 10 weeks for a brief time intra-day before closing flat at 50.09/10 against the US dollar on alternate bouts of buying and selling.
Forex traders partly attributed the early rise in the rupee to the Reserve Bank shifting its policy stance to growth from inflation in its monetary policy review today. The central bank cut the cash reserve ratio by 0.50 percentage point.
They added rupee's initial gains, also on account of continued foreign fund inflows, were offset by a recovery in dollar value overseas amid month-end demand from importers, mainly oil refiners, for the US currency.
At the Interbank Foreign Exchange (Forex) market, the domestic unit opened strong at 50.00/01 a dollar and moved in a range of 49.92 and 50.13, before concluding at 50.09/10, a marginal gain of 1 paisa from its last close.
“The increase in the value of rupee has been partially aided by euro's value rising against the dollar,” Dhanlaxmi Bank Head (Treasury) Ramesh Krishnan said.
“On the domestic front, the RBI today shifted its policy stance to growth from inflation, which in a way boosted the rupee sentiment as well,” he added.
Meanwhile, the BSE benchmark Sensex also crossed the 17,000-mark to a 10-week high as the Reserve Bank cut cash reserve ratio (CRR) to infuse liquidity in the system before easing a little to close at 16,995.77. The cut in the CRR will infuse Rs 32,000-crore liquidity into the banking system.
“After the initial appreciation of rupee due to euphoria emanating from the slashing of CRR rate by 50 bps, rupee depreciated marginally due to demand from importers,” Indian Overseas Bank GM (Treasury) T S Srinivasan said.
He added that today's policy announcement is not likely to help capital inflows into the country which in turn has impact on the currency.
FIIs, which were net buyers for the last fifteen trading days, sold shares worth USD 2.55 on January 23.
The rupee premium for the forward dollar ended sharply higher on fresh paying pressure from banks and corporates.
The benchmark six-month forward dollar premium payable in June ended further strong at 187-189 paise from 179-181 paise yesterday and far-forward contracts maturing in December also shot up to 276-278 paise from 266-268 paise.
The RBI has fixed the reference rate for the US dollar at 49.9673 and for the euro at 65.0887.
The rupee recovered slightly against the pound sterling to end at Rs 77.99/78.01 from Monday's close of Rs 78.00/02 and improved further against the Japanese yen to Rs 64.82/84 per 100 yen from Rs 65.17/19 in the previous session.
However, it eased further against the euro to Rs 65.17/19 from its last close of Rs 65.14/16.
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