Forex update: Rupee ends 8 paise up, logs third day of gains on strong equities

The rupee extending gains for third straight day to close eight paise higher at 60.84 against the Greenback following late dollar selling by exporters and bullish local stocks, extending gains for third straight day.

The domestic unit washed out all of its initial losses and came off from one-month intra-day low of 61.2050.

Fall in dollar value abroad against its major rivals also helped the rupee recovery from early losses. The dollar index, a gauge of six major global units, was down by 0.25 per cent on Thursday.

At the Interbank Foreign Exchange (Forex) market, the domestic currency resumed weak at 61.09 a dollar from previous close of 60.92 and dropped further to a one-month intra-day low of 61.2050 -level not seen since August 13, 2014 when it had touched a low of 61.30.

It later bounced back to a high of 60.8350 on strong rally in local stocks before concluding at 60.84, displaying a rise of eight paise or 0.13 per cent.

On Wednesday, the American unit extended gains versus the Japanese yen and the euro after the US Federal Reserve renewed its pledge to keep interest rates near zero for a "considerable time", giving relief to emerging markets, including the domestic market on receding fears of immediate pull out by foreign funds.

Renewed buying by foreign funds in local equities too aided the rupee rise. FPIs/FIIs, after selling shares worth US $120.70 million on Tuesday, picked up shares worth US $29.29 million on Wednesday, as per data released by capital market regulator Securities and Exchange Board of india (Sebi).

The 30-share Bombay Stock Exchange (BSE) Sensex on Thursday zoomed by 480.92 points or 1.81 per cent to end  at a one-week high.

Pramit Brahmbhatt, Veracity Group CEO, said, "Rupee continues to trade strong for the third day and appreciated taking cues from strong local equities. Local indices surged on positive global sentiments after US Fed stated that rate hikes would not happen for a "considerable time."

"After yesterday's gain dollar index is also trading slightly weak for the day at US $84.51 which further helped Rupee to trade strong. The trading range for the spot rupee is expected to be within 60.50 to 61.30," he added.

The rupee had earlier hit an intra-day low after dovish Fed comments, but regained back over the optimism of trade ties with China, according to India Forex Advisors.

In the forwards market on Thursday, premium continued its south bound journey on sustained receipts by exporters.

The benchmark six-month premium payable in February dipped to 221.5-223.5 paise from previous close of 227-229 paise and far-forward contracts maturing in August, 2015 also dropped to 475-477 paise from 480.5-482.5 paise.

The Reserve Bank of India (RBI) fixed the reference rate for dollar at 61.0558 and for the euro at 78.5727.

The rupee softened further against the pound to 99.41 from 99.35 previously while improved further to 78.37 per euro from 78.93. It hardened to 55.98 per 100 Japanese yen from 56.76.