Rupee rebounds from 1-month low on dollar selling

Bucking a weak trend in stocks, the Indian rupee on Tuesday recovered from one-month lows to end with a modest gain of eight paise at 61.05 against the Greenback on fresh dollar selling by exporters.

Persistent capital inflows also aided the rupee rise while the dollar index was almost stable against a basket of six major currencies ahead of the outcome of two-day policy meeting by the US Federal Reserve starting from Tuesday.

At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced strong at 61.02 a dollar from previous close of 61.13, a one-month low.

It was later trapped in a narrow range of 61.01 and 61.1425 before settling at 61.05, a net rise of eight paise or 0.13 per cent.

On Monday, it had plunged 48 paise, or 0.79 per cent, its biggest fall in more than five weeks.

The Indian benchmark S&P BSE Sensex, after tumbling by 244.48 points or 0.90 per cent on Monday, tanked 324.05 points or 1.21 per cent today to end at three-week lows.

FPIs/FIIs bought shares worth $79.57 million on Monday, as per Sebi data.

Pramit Brahmbhatt, Veracity Group CEO said, "Rupee appreciated today even as local equities closed down by over one per cent. Rupee movement was aided by lower trade deficit in August. Dollar index rally slowed down today, which further supported the rupee. The trading range for the spot rupee is expected to be within 60.50 to 61.50."

"The Indian rupee traded on a cautious note today taking cues from its Asian peers. However, the data showing narrower trade deficit in the month of August on the domestic front helped," India Forex Advisors said.

Yesterday after markets closed, government data showed that trade gap in August stood at $10.83 billion.

In forwards market on Tuesday, premium closed weak on fresh receipts by exporters.

The benchmark six-month premium payable in February moved down to 228.5-230.5 paise from 231-233 paise previously.

Far-forward contracts maturing in August, 2015 declined to 482-484 paise from 484-485 paise.

The Reserve Bank of India fixed the reference rate for dollar at 61.1015 and for the euro at 79.0348.

The rupee rebounded against the pound to 98.81 from last close of 99.29 while softened further to 79.03 per euro from 79.00. It, however, held stable at its overnight closing level of 57.00 per 100 Japanese yen.