Rupee logs 1st rise in 3 days, up 12 paise

The rupee on Monday gained for the first time in three days and closed up 12 paise to 62.56 against the dollar on fag-end sales of the US currency.

After dropping 27 paise in the previous two sessions, the rupee's strength was also linked to anticipation of spectrum auction inflows and a weak American currency overseas.

At the Interbank Foreign Exchange (Forex) market, the domestic currency resumed slightly lower at 62.70 a dollar from last weekend's close of 62.68.

It later fell further to a low of 62.79 on weak local stocks, worries over recent cut in US stimulus and lackluster Chinese data. However, later the rupee bounced back to settle at day's high of 62.56, a rise of 12 paise or 0.19 per cent.

The dollar index was down 0.14 per cent against a basket of six major currencies when local forex markets ended. "The initial weakness was due to poor China data and strength in US dollar index. Fed's decision of tapering its asset purchase programme every month is seen getting reflected in emerging market currencies," said Abhishek Goenka, Founder&CEO, India Forex Advisors.

Data showing India's manufacturing sector in January expanded at the strongest pace in 10 months, helped sentiment.

Pramit Brahmbhatt, CEO, Alpari Financial Services, (India) observed that rupee's rise was aided by the dollar index trading weak as investor focus on emerging-markets fears faded. "The trading range for the USD/INR pair is expected to be within 62.00 to 63.50," he said.

The BSE Sensex slipped about 305 points to end at its lowest level in over 11 weeks today.  "USD-INR witnessed some flat to negative movement with weakness seen in dollar internationally along with improved Indian manufacturing PMI data. Equity markets witnessed sharp downside movement. Indian benchmark yields witnessed some lower movement during the day. Dollar Index resistance is seen at 81.40," said a note from Admisi Forex India.

As per provisional data, FIIs sold stocks worth Rs 735 crore today. Meanwhile, forward dollar premiums remained weak on persistent payments by exporters.

The benchmark six-month forward dollar premium payable in July softened to 250.5-252.5 paise from 252-254 paise last Friday.

Far forward contracts maturing in January eased to 493-495 paise from 494-496 paise. The RBI fixed the reference rate for the dollar at 62.6891 and for the euro at 84.5780.

The rupee rebounded to 102.27 against the pound from last close of 103.14. It improved to 84.51 per euro from 84.87. It, however, declined further to 61.27 per 100 Japanese yen from 61.27.