Rupee at 1-month high, up 7 paise at 59.04 against dollar

After another day of volatile trade, the rupee today appreciated by seven paise to close at a new one-month high of 59.04 against the dollar as the RBI's liquidity-tightening measures continued to lend support.

At the Interbank Foreign Exchange Market, the rupee opened strong at 58.82 a dollar from the previous close of 59.11 and strengthened to 58.69 on initial gains in local stocks. Later, it fell to a low of 59.10 before closing at 59.04, a rise of seven paise or 0.12 per cent -- its third day of gains.

Although the rupee strengthened above the 58 mark for the second day, it was unable to sustain those gains. On Tuesday, the Reserve Bank had announced additional liquidity-tightening measures to contain excessive speculation and volatility in the foreign exchange market.

"The currency continued to get the boost from the number of measures taken by the RBI in last 10 days," said Abhishek Goenka, founder & CEO of India Forex Advisors. "It indicates that the central bank is not ready to see the rupee weakening and will take every possible step to stem the fall."

The benchmark S&P BSE Sensex dropped 56.57 points, or 0.29 per cent. FIIs pulled out a net Rs 442.94 crore yesterday, as per provisional data with stock exchanges.

The dollar index was down by 0.10 per cent against six major global rivals.

"The trading range for the spot USD/INR pair is expected to be within 58.65 to 59.35," said Pramit Brahmbhatt, CEO of Alpari Financial Services (India).

Forward dollar premiums dropped sharply on fresh receipts by importers.

The benchmark six-month forward dollar premium payable in December dipped to 228-233 paise from Wednesday's close of 248-254 paise. Far-forward contracts maturing in June fell to 451-456 paise from 492-497 paise.

The RBI fixed the reference rate for the dollar at 58.9415 and for the euro at 77.8663.

The rupee improved to 90.33 against the pound sterling from the previous close of 90.78 and moved up to 77.99 per euro from 78.29.

It fell against the Japanese yen to 59.25 per 100 yen from 59.11.