Rupee surges past 44/dollar

Traders said demand for dollars from refiners as global oil climbed to a two-and-a-half-year high kept a lid on the gains in the rupee,which has appreciated 4.3 per cent from a 2011 low of 45.92 at end-January.

Crude oil’s rise to over $110 a barrel caused panic among oil companies who are bidding for dollars strongly,said a foreign exchange dealer at a state-owned bank.

Oil is India’s largest import item and refiners are the biggest buyers of dollars in the local forex market. World oil prices are being driven by supply cuts stemming from attacks on Libyan oil fields offset demand concerns spurred by a major aftershock in Japan.

Foreign portfolio investments in Indian equities are a key driver for the rupee. They have purchased nearly $3 billion of shares since the start of March,after being net sellers in January and February.

The euro’s gains against the dollar and stronger Asian peers also underpinned the rupee.

The euro was at $1.4397 after having touched a 15-month high of $1.4405 earlier in the day.

The index of the dollar against six major currencies was down 0.53 per cent at 75.193 points,compared with 75.649 points at the close of local trade on Thursday.

A senior foreign exchange trader at a private-sector bank said 43.97 was a resistance for the rupee. If it breaks past this,the rupee could rise quickly to 43.70/75,he said.

The one-month onshore forward premium was at 25.50 basis points,higher from 25.00 on Thursday,the three-month was at 80.25 basis points versus 79.25 and the one-year was at 301 basis points versus 298.

The one-month offshore non-deliverable forward contracts were quoted at 44.21,weaker than the onshore spot rate.

In the currency futures market ,the most traded near-month dollar-rupee contracts on the National Stock Exchange,the MCX-SX and the United Stock Exchange were all at 44.1825,with the total volume at about $2.73 billion.