Rupee opens higher against US dollar .

The rupee gained against the US dollar in early trade on Monday, adding to gains in the two previous sessions, as global risk assets stabilised. It opened at 55.29/$ higher than Friday's close of 55.37/$ and quickly rose further to 55.13 level at 9:13 a.m.

The rupee, which depreciated against the dollar in six consecutive trades last week, closed higher against the US currency. It traded higher against the US dollar through most of afternoon trade on Friday after opening below the key 56-levels, down by 38 paise.

According to Moody's, significant depreciation of the Indian rupee is insignificant for India's sovereign credit. "Government foreign currency debt comprises only 7 per cent of total government debt and 5% of GDP. Most of it is owed to multilateral and bilateral creditors and has a maturity profile that keeps annual foreign currency repayments relatively low. Therefore, the direct effect of depreciation on the government’s own debt repayment capacity is limited," Moody's said in a report.

The Reserve Bank of India was suspected to have sold dollars in spot markets via state-run banks to prevent the rupee from falling beyond the psychologically key 56-level, seven traders said on Friday.

The Indian benchmarks too traded higher. At 09.18 a.m., both NSE Nifty and BSE Sensex indices were up over 0.5 per cent.

The rupee has been depreciating to new lifetime lows on increased dollar demand from importers, especially oil refiners coupled with capital outflows from foreign funds. Even selling of the American currency by exporters and banks failed to check persistent fall.

Dollar has been appreciating against a basket of currencies worldover. Dollar Index has hit a 20 month high in trade, while Euro has been depreciating, down over 5 per cent this month against the US dollar and Yen.

According to Standard Chartered, Rupee may drag to 58.60 levels against the dollar on account of technical weakness. Morgan Stanley, however, expects rupee to cross levels of 60 and touch 62.70/$.

Meanwhile, Finance Minister Pranab Mukherjee said last week he is disappointed to see that the fluctuation of the Rupee against the dollar is increasing. "Sensex and Nifty figures are also disappointing. Brent crude price has also moved up, and the quantum of India’s imports is quite substantial, around $160 – 170 bn," he said.

He ascribed the rupee's precipitous slide over the past six days to the euro zone crisis and to the global slowdown, adding that the Indian stock markets as well as economic growth have been hit by the slowdown.

The rupee has now fallen more than 5 per cent this year against the dollar to make it the worst-performing Asian currency monitored daily by Reuters. It has dropped more than 13 per cent from its 2012 high reached in February.

Source : profit.ndtv.com