Rupee cuts early losses, closes 11 paise up at 55.52 vs USD

The rupee today rebounded from early lows to close at 55.52, up 11 paise, against US dollar on the back of capital inflows, amid a weak trend in the American currency in overseas markets.

The dollar was under pressure on hopes of US Federal Reserve chief Ben Bernanke later in the day dropping hints on monetary easing at the Jackson Hole conference in Wyoming.

At the Interbank Foreign Exchange (Forex) market, the rupee opened lower at 55.75 a dollar from yesterday's close of 55.63. It immediately touched a low of 55.77 on month-end dollar demand from importers amid fall in stocks ahead of first quarter GDP data.

However, with the euro rising to an eight-week high against the dollar before the speech by Bernanke, rupee recovered sharply. Any further step to increase money supply will be typically negative for the dollar.

With India's April-June quarter GDP growth coming at 5.5 per cent, a tad better than 5.2-5.3 per cent estimate put out by most economists, the sentiment in favour of rupee also improved.

"India's Q1 GDP numbers surprised the street which has been projecting sharp declines," said Pramit Brahmbhatt, CEO, Alpari Financial Services (India).

The rupee settled at the day's high of 55.52, up 11 paise or 0.20 per cent on a spate of dollar selling by exporters.

The dollar index, a gauge of six major global rivals, was down by 0.49 per cent in cautious trade.

"The rupee gained on account of euro raising against the dollar. Investors wait for the speech by US Federal Reserve Chairman Ben Bernanke that could offer clues on the central bank's next policy steps," said Abhishek Goenka, Founder & CEO, India Forex Advisors.

The premium for the forward dollar also recouped on fresh payments from banks and corporates.

The benchmark six-month forward dollar premium payable in February moved up to 187-189 paise from overnight close of 185-187 paise.

The premium for far-forward contracts maturing in August also rose to 343-345 paise from 338-340 paise.

The RBI has fixed the reference rate for the US dollar at 55.7215 and for euro at 69.6555.
The rupee recovered against the pound sterling to 87.99 from Thursday's close of 88.15.

It also rebounded against the Japanese yen to 70.68 per 100 yen from 70.78.
The rupee, however, declined further to 69.90 per euro from its last close of 69.79.

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