Mumbai: After slumping to 60.90 levels in early trade, the rupee managed to recoup most losses to end almost flat at 60.43 against the US dollar on suspected RBI intervention and stricter hedging rules for FIIs.
The dollar strengthened overseas after the US Federal Reserve gave no indication of withdrawing its bond-buying plan and US GDP growth figures were better than expected. The rupee opened lower at 60.70 a dollar from the previous close of 60.40 at the Interbank Foreign Exchange Market.
It moved in a range of 60.25 to 60.90, before PSU banks selling dollars at the behest of RBI helped the local currency end at 60.43, down 3 paise. "Towards the end, rupee futures appreciated over 0.75 per cent as RBI intervention was suspected in the foreign exchange markets to defend the rupee," said Pramit Brahmbhatt, CEO of Alpari Financial Services (India).
In yet another step to rescue the rupee, which fell to a near-record low of 61.20 yesterday, the Reserve Bank today tightened hedging rules by making it mandatory for foreign institutional investors to obtain the consent of holders of participatory notes and derivative instruments before hedging.
The benchmark S&P BSE Sensex erased initial gains and closed down about 29 points. Foreign institutional investors pumped in Rs 142.87 crore yesterday, as per provisional data with the stock exchanges.
"The trading range for the spot USD/INR pair is expected to be within 60.00 to 60.80," said Brahmbhatt. In Chennai, RBI Governor D Subbarao reiterated there was no time frame for rolling back liquidity tightening measures imposed to address exchange rate volatility. "The measures taken will be in place until volatility in the foreign exchange market is controlled. I do not want to give any time frame," Subbarao said.
Forward dollar premiums dropped on sustained receipts by exporters. The benchmark six-month forward dollar premium payable in January dipped to 251-255 paise from the overnight close of 266-270 paise.
Far-forward contracts maturing in July tumbled to 458-460 paise from 479-483 paise. The RBI fixed the reference rate for the dollar at 60.7423 and for the euro at 80.6025. The rupee fell back to 92.07 against the pound sterling from 91.84 previously and recovered to 79.99 per euro from 80.11. It also bounced back against the Japanese yen to 61.25 per 100 yen from 61.81.
Next: Sensex declines for 7th day, drops 29 points on weak eco data

Sensex declines for 7th day, drops 29 points on weak eco data
Mumbai: After fluctuating almost 400 points, the benchmark S&P BSE Sensex ended in the negative zone for the 7th day in a row today, down 29 points, amid investor concerns about weak manufacturing data.
The 30-share Sensex opened higher, climbing to 19,569.20 on the back of better-than-expected US GDP growth and the Fed's assurance on maintaining its bond-buying programme. The index dropped after the HSBC Survey showed India's purchasing managers index declined to 50.1 in July. A figure below 50 indicates a contraction in manufacturing sector activity.
The Sensex touched a one-month intra-day low of 19,170.46 before recovering some lost ground on firm cues from European markets to settle at 19,317.19, a fall of 28.51 points or 0.15 per cent.
The broader Nifty index on the NSE fell 0.25 per cent to 5,727.85. The SX40 index on the MCX-SX dropped 0.18 per cent. Growth in eight infra industries plunged to 0.1 per cent in June due to a contraction in oil, natural gas, coal and electricity output, government data showed yesterday evening.
Goldman Sachs downgraded India to 'underweight' and said it is looking for clearer growth signs to turn constructive, amid recent recent activity data being sluggish. Financial Technologies (India) Ltd., one of the promoters of the National Spot Exchange Ltd., was the biggest loser, plunging 64.6 per cent to Rs 191.75.
NSEL said yesterday it had halted trading in one-day forward contracts until further notice. Market regulator SEBI is probing the share's decline. Of the 13 sectoral indices, 12 declined, led by realty, PSU, refinery, metal and auto segments. The banking index climbed 1.2 per cent on gains in private bank shares.
On the Sensex, declines in RIL, M&M, ONGC, ITC, SBI, Coal India, BHEL, Tata Steel and Hindalco countered advances in HDFC Bank, HDFC, HUL and ICICI Bank. "M&M was down by about 4 per cent after it announced a decline of 21 per cent in sales numbers for July," said Nidhi Saraswat, a senior research analyst at Bonanza Portfolio Ltd. "Global cues and quarterly results shall be closely watched for further market direction."
Asian stocks ended mostly higher, paring this week's losses, after the Federal Reserve maintained its bond-buying programme. Key indices in Hong Kong, China, Japan, Singapore and South Korea rose. Indices in France, Germany and UK firmed up in early trade.
In the domestic market, 17 Sensex shares ended lower, including BHEL (4.80 pc), M&M (4.42 pc), Coal India (3.94 pc), ONGC (3.64 pc), Hindalco (3 pc), Tata Steel (2.57 pc), RIL (2.44 pc) and SBI (1.54 pc).
The gainers on the index included HDFC Bank (3.67 pc), HUL (3.37 pc), HDFC (2.18 pc), GAIL India (1.14 pc) and Jindal Steel (1 pc). Among sectoral indices, S&P BSE-Realty dropped 3.98 pc, S&P BSE-PSU 2.76 pc, S&P BSE-Oil&Gas 2.6 pc, S&P BSE-Metal 1.84 pc, S&P BSE-Auto 1.51 pc, S&P BSE-Power 1.44 pc, S&P BSE-CD 1.36 pc and S&P BSE-CG 1.08 pc.
The market breadth was negative as 1,431 stocks finished lower, 784 ended higher and 140 ruled steady. Total turnover dropped to Rs 2,244.66 crore from Rs 2,372.69 crore yesterday. Foreign institutional investors were net buyers of Rs 142.87 crore yesterday, according to provisional data with the stock exchanges.