Rupee strengthens further

MUMBAI, SEPT. 25. The rupee continued to strengthen against the U.S. currency today, backed by improved market sentiment, but ended off early intra-day highs following renewed dollar demand from banks due to concerns of global political uncertainties.

In fairly choppy two-way trading at the inter-bank foreign exchange market, the rupee closed at 47.87/88 a dollar, another 1-1/2 paise rise from Monday's finish of 47.8850/8950. It had gained by over 11 paise yesterday.

Sentiment for the rupee turned for the better after the lifting of economic sanctions by the U.S., sharp fall in global oil prices and lowering of interest rates on export credit by the Reserve Bank of India.

The rupee opened distinctly firm at 47.85/87 and touched early intra-day high of 47.84/86 on fresh exporter dollar sales and unwinding of long positions by banks. However, renewed heavy dollar demand from banks pushed the rupee down to intra-day low of 47.91/93 on fears of retaliatory attacks by the U.S. against Afghanistan. But, dollar supplies later emerged and allowed the rupee to bounce back to 47.87/88 at close, dealers said.

Although rupee sentiment has improved considerably due to the U.S. decision to waive sanctions against India and a virtual slump in global oil prices, the general outlook remains grim, given the global political uncertainties, bankers said.

- PTI

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