Rupee eases on choppy shares, euro support.

The rupee weakened on Tuesday but recovered most of its intra-day losses tracking domestic shares, with the euro’s rise against the dollar limiting the falls.

The partially convertible rupee ended at 46.55/56 per dollar, off an intra-day low of 46.76, but about 0.1% weaker than Monday’s close of 46.4850/4950 when it had hit 46.40 during trade, its highest since May 31.

“Volatile stocks made the rupee shaky but towards the end, the recovery in share prices and a weaker dollar allowed it to gain. I expect it in a tight range of 46.40 to 46.60 a dollar tomorrow,” said a senior dealer at a foreign bank. The benchmark share index climbed 0.4% to rise for the fifth day in its longest winning streak in two months after higher advance taxes paid by companies signalled robust earnings growth and lifted investor sentiment.

So far in June, foreigners have bought a net $358 million worth of shares, after dumping around $2 billion in May. The funds are net buyers of about $5 billion in 2010.

The euro’s rise also supported buying in the local currency. The euro rose against the dollar on strong demand at bond auctions in Ireland, Belgium and Spain.

The dollar index versus six majors was down 0.1%. Traders also watched for monetary cues after official data on Monday showed double-digit inflation in India. The wholesale price index rose an annual 10.16% in May, above a Reuters forecast of 9.56% and April’s 9.59%.

One-month offshore non-deliverable forward contracts was at 46.58, near the onshore spot rate. In the currency futures market, the most traded near-month dollar-rupee contracts on NSE and MCX-SX ended at 46.6450 and 46.6350, respectively, with the total traded volume on both exchanges at $7.2 billion.

Source : The Economic Times