Rupee up on RBI Comments, Better Risk Appetite Close.

MUMBAI: The Indian rupee gained on Wednesday comforted by the Reserve Bank of India's assurance it will take more measures to curb weakness in the currency along with improved global risk appetite that pushed the euro and domestic equities higher.

At 9:42 a.m. (0412 GMT), the rupee was at 52.70/71 to the dollar, after closing little changed at 52.87/88 on Tuesday.

"Dollar sellers have found comfort from the central bank's comments on Thursday and the euro too has risen overnight on a slight easing of worries over the region's debt crisis. Rupee is being helped by both," said Hari Chandramgathan, a forex dealer with Federal Bank in Mumbai.

Subir Gokarn, a deputy governor at the RBI, said on Tuesday the central bank would use other measures to bring stability to the foreign exchange market.

Traders said as a result of the RBI's moves last Thursday to curb speculation and its public statements indicating the focus on the forex market, volumes in the dollar-rupee have dropped sharply from the usual $2 billion to $3 billion.

Traders expect the rupee to stay in a narrow band for at least the next few sessions.

Federal Bank's Chandramgathan sees rupee in a 52.55-52.90 range on Wednesday. The currency had touched a record low of 54.30 last Thursday.

On Dec. 15, the RBI reduced the net overnight open position limit of banks to curb excessive volatility and shore up the rupee, which had hit an all-time low of 54.30.

Asian stocks and the euro rose on Wednesday after upbeat U.S. and German data and strong demand for Spanish debt tempered risk-aversion, with investor focus turning to a European Central Bank tender as a gauge for euro zone funding strains.

The offshore non-deliverable forwards (NDFs) indicated further weakness, with the one-month rupee NDFs at around 53.22.

In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were around 52.84. Total volume was at $433 million.

Source : economictimes.indiatimes.com