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Rupee ends firmer at 46.35/$

The rupee ended firmer on Tuesday buoyed by strong dollar sales by exporters, banks and foreign funds, dealers said.

It closed at 46.345/35 per dollar, compared with Monday's 46.365/375, after state-run banks soaked up most of the supplies as the currency hit highs of around 46.3350.

Dealers said a north-based textile exporter sold nearly $20 million.

Corporate dollar sales were heavier than sales by foreign institutional investors which have driven the rupee's 0.7 per cent rally in January, dealers said.

FIIs have invested $630 million in Indian debt and equity markets so far this month after being net sellers in December.

Dealers said state-run banks were aggressive in checking the rupee's gains which tempered the customary dollar sales by banks ahead of the long weekend. State-run banks often intervene on behalf of the central bank.

"Who wants to carry a short (dollar) position overnight when the state-run banks protect such levels so aggressively," a dealer with a state-run bank said.

Indian markets are closed for the country's Republic Day holiday on Friday and banks would normally cash in on the high carry benefit over the weekend.

The forward market was indecisive and rates were steady while the market debated which way premiums would head, dealers said.

The central bank's suspected intervention of dollar inflows was not helping call money rates which stayed over 10 per cent.

Dealers said call money was being used to fund leveraged positions in the securities market on expectations of monetary easing or liquidity enhancement measures.

But premiums will move higher if the United States eased interest rates again at a meeting next week, they said.

The six-month dollar-rupee premium ended at 4.51 per cent, little changed from the previous day's.

Intra-day report

The rupee opened on a steady note and gained in early trade, with the outlook remaining bullish amid improved dollar supplies from foreign funds, dealers said.

At 11:20 a.m., the rupee was quoted at 46.33/34 per dollar after opening unchanged at 46.365/375.

The rupee has gained over 0.7 per cent against the dollar in the past 10 sessions, and is up nearly 1.2 per cent from its record low of 46.92 on October 30.

Data from the stock market regulator showed foreign funds have invested a net $630 million in Indian stocks and bonds so far this month after being net sellers in December.

Dealers said early morning dollar sales by banks looking to benefit from the long weekend differentials also helped the rupee gain against the dollar.

Markets in India will be closed on Friday due to a national holiday and the weekend has been advanced by a day.

Banks normally sell dollars on Wednesday and buy them back before the weekend.

But dealers said they expected state-run banks to start buying later in the day and this will cap any sharp gains by the rupee.

These banks have often intervened on behalf of the central bank in the past, though in recent days they may have bought on behalf of state-run firms.

"This should keep the rupee in a 46.33 to 46.39 range for the day," a dealer in a foreign bank said.

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