Rupee gains 31 paise to one-month high of 62.05 against dollar

The rupee recovered from early losses and gained 31 paise to close at a one-month high of 62.05 against the dollar on Wednesday on fresh selling by exporters and banks, amid foreign capital inflows into local stocks.

The rupee opened lower at 62.40 per dollar against the previous close of 62.36 at the interbank foreign exchange market and dropped further to 62.55 on dollar demand from banks and importers.

It recovered to 62.04 per dollar before ending at 62.05, a gain of 31 paise or 0.50 per cent. The rupee is at the highest level since it ended at 61.62 on November 5.

The rupee traded strong against the dollar due to inflows from foreign banks, which may be partially tied to Power Grid share sale inflows, said Pramit Brahmbhatt, CEO of Alpari Financial Services (India).

The follow-on-public offer of Power Grid Corporation was fully subscribed on the second day on Wednesday. The issue is open till tomorrow for institutional buyers and it will close a day later for retail investors.

The rupee gained even as the dollar rose against major currencies today on expectations that key economic data from the US this week could increase pressure on the Federal Reserve to taper its bond-buying programme.

The November labour report from the US, due on Friday, is a key indicator to gauge the recovery in the US economy. A stronger economy may lead to the Federal Reserve tapering its USD 85 billion a month economic stimulus.

The benchmark 30-share Sensex tumbled 146.21 points or 0.7 per cent to 20,708.71. Overseas investors bought a net Rs 516.59 crore of shares yesterday, according to provisional figures from the stock exchanges.

Forward dollar premiums recovered on fresh payments from banks and corporates.

The benchmark six—month forward dollar premium payable in May edged up to 246—1/2 to 248—1/2 paise from 246 to 248 paise previously and far—forward contracts maturing in November moved up to 480—1/2 to 482—1/2 paise from 478—1/2 to 480—1/2 paise.

The RBI fixed the reference rate for the dollar at 62.3330 and for the euro at 84.6848.

The rupee recovered to 101.58 per pound as against 102.35 yesterday and to 84.33 against the euro from 84.60.

It firmed up to finish at 60.51 per 100 Japanese yen from 60.71 previously.