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Rupee ends firm at 46.40/$

The rupee extended its gains rising for the second consecutive day against the US dollar in fairly active trade at the inter-bank foreign exchange market on good dollar supplies from foreign custodian banks as well as financial institutions.

The Indian unit that was well supported initially in the light of weakened dollar in the global markets and month-end local demand already over, opened better at Rs 46.40/41 per dollar and later remained range-bound before ending at Rs 46.39/40.

Intra-day report

The rupee gained in early trade on Wednesday buoyed by steady foreign capital inflows, while fears over the economic impact of last week's killer earthquake in Gujarat receded, dealers said.

Traders said they were awaiting the results of the Federal Open Market Committee's meeting, which is widely expected to announce a fresh cut in US rates to follow up on a cut earlier in January. Announcements are expected after 1915 GMT on Wednesday.

Some traders expect a cut in US rates to spur fresh portfolio investments into emerging markets like India.

At 11:20 a.m., the rupee was quoted at 46.387/397 per dollar after opening at 46.40/42 and compared to Tuesday's close of 46.42/43.

Customary dollar sales by banks on Wednesday to benefit from weekend swap differentials also aided the rupee in early trade, dealers said.

Banks usually sell dollars on Wednesday and buy them back before the weekend to gain from the swap differentials.

Dealers said concerns over the economic impact from the devastation caused by a killer earthquake in India's second most-industrialised state of Gujarat last week had faded as capital flows remained strong, but warned that the impact on exports was yet to be gauged.

"Possible negative impact on exports is the only factor that will weigh on the rupee, otherwise foreign flows have been good and are expected to remain so," a dealer in a foreign bank said.

India's Commerce and Industry Ministry on Tuesday approved 13 foreign direct investment proposals of $47.18 million. Data from the stock market regulator showed foreign funds had invested a net $766.8 million in Indian stocks and bonds this month till January 29 compared to just over $1.53 billion in the whole of calendar 2000.

Premiums in the forward market are expected to remain firm until the outcome of the US Federal Reserve's meeting is known.

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