The Hindu : Business : Rupee quietly steady

Online edition of India's National Newspaper
Friday, Jul 09, 2004

Business

Business

Rupee quietly steady

MUMBAI, JULY 8. The rupee ended quietly steady against the U.S. currency today after gyrating either-way on alternate bouts of hectic dollar buying and selling in volatile trading at the interbank foreign exchange market even as the budget proposals for 2004-05 provided a further stimulus for liberalisation on the FDI regime.

Closing at the overnight finish of 45.84/86 a dollar, the rupee moved erratically between 45.7100 and 45.9100, sandwiched between improved market sentiment, following the budget proposal to further liberalise the foreign direct investment regime and the new proposed turnover tax, dealers said.

Foreign banks shed long dollar positions ahead of the announcement of the Budget and after the FDI limits were raised in the budget proposals, liquidated more dollar positions to drive the Rupee to a peak of Rs 45.70/72. However, with the introduction of the new turnover tax, many participants rushed to buy dollars, dealers said.

The rupee rallied smartly by 20 paise yesterday after the previous day's steep decline of 22 paise due to hectic dollar demand amidst thin supplies. With improved market sentiment, traders expect the rupee to rally tomorrow, but any sharp gains may invite central bank intervention in support of exporters.

The Reserve Bank of India fixed the reference rate for the U.S. currency at Rs. 45.73 and for the single European unit at Rs. 56.48. — PTI

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