Friday, Oct 24, 2003
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The domestic unit closed at 45.32/33 a dollar, a 1-1/2 paise gain from yesterday's finish of 45.3350/3450, but off early sharp gains when it opened distinctly firm at 45.28/30 on the back of a weak dollar against major global currencies. It, however, dipped to a low of 45.33/34, dragged down by sporadic dollar demand from State-owned banks, possibly on behalf of the central bank.
Public sector banks buy/sell dollars on behalf of the Reserve Bank of India to curb excessive volatility in the currency markets and prevent sharp swings either-way. Strong portfolio and trade inflows continued to give the rupee firm underlying support on the back of a lingering weak dollar against major global currencies, dealers said. But, intermittent dollar demand from State-run banks has put a solid lid on the rupee's rise, they added.
"Despite positive sentiment for the rupee, the RBI's surrogate intervention through State-run banks prevented the rupee from breaking through the 45.30 a dollar level," a forex dealer said, adding "It is only a matter of days before it breaches the barrier, as robust portfolio inflows continues to give the rupee strong support".
The rupee has appreciated by nearly 5.90 per cent so far in the current calendar year, boosted by strong investment and trade inflows. Traders expect the rupee to consolidate tomorrow, but fears of central bank intervention through State-run banks will cap its gains. PTI
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