Rupee Recoups Losses to End at 53.68 V/s Dollar
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The rupee recovered its early losses and ended almost unchanged at 53.68 against US dollar today after RBI hiked the FII investment limit in certain debt instruments by USD 5 billion each and removed lock-in period for overseas investors buying G-Secs for the first time.

The rupee commenced lower at 53.77 a dollar from previous close of 53.67 a dollar and declined further to a low of 53.89 at the Interbank Foreign Exchange (Forex) market, following sustained dollar demand from importers, mainly oil refiners.

Hesitancy in local equities at initial stages and firm dollar overseas also weighed on the rupee.

Later, it bounced back on dollar selling by exporters and continued foreign funds inflow in stocks to an intra-day high of 53.62 before settling at 53.68, a loss of a mere one paisa.

Yesterday, it had risen by 14 paise or 0.26 per cent.

Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said: "The rupee witnessed a volatile session where it traded weaker till mid session and witnessed sharp gains after the government raised the debt limit of FII's from USD 20 billion to USD 25 billion. The rise in government debt limit is positive for the rupee in the immediate term."

Earlier today, the Reserve Bank hiked FII investment limits in government securities and corporate bonds by USD 5 billion each, taking the total cap in domestic debt to USD 75 billion, with a view to bridging the current account deficit.

Further liberalising the norms, the three-year lock-in period for foreign institutional investors (FIIs) purchasing government securities (G-Secs) for the first time has been done away with, RBI said.

Meanwhile, the Indian stock market benchmark BSE Sensex, which was in positive terrain in morning deals, closed down by 102.83 points or 0.51 per cent at one-week low levels.

Foreign Institutional Investors (FIIs) injected USD 151.52 million in equities yesterday as per Sebi data.

The dollar index was up by 0.10 per cent against a basket of six major currencies.

"The rupee was seen trading in the range of 27 paise. It was weakening initially taking cues from the strong dollar index which was trading above 80.00 levels. However later it started gaining after the announcement of the RBI regarding raising the investment limit for FIIs," said Abhishek Goenka, Founder and CEO, India Forex Advisors.

The Forex and Money markets will remain closed tomorrow for observing "Id-E-Milad".

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

The benchmark six-month forward dollar premium payable in June edged up to 156-158 paise from Wednesday's close of 155-157 paise.

Far-forward contracts maturing in December also rose to 312-314 paise from 308-310 paise.

The RBI has fixed the reference rate for the US dollar at 53.8515 and for euro at 71.7210.

The rupee improved further against the pound sterling to 84.95 from previous close of 85.09 and also finished slightly higher against the euro to 71.54 from 71.57.

It, however, bounced back against the Japanese yen to 59.94 per 100 yen from last close of 60.76.

Emerging story. Watch this space for updates as more details come in
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