Rupee snaps 3-day fall as exporters cash dollars

MUMBAI: The Indian rupee snapped a three-day losing streak and ended up on Wednesday as exporters sold the dollar aggressively following its
weakness against a basket of currencies, including the Japanese yen.

The partially convertible rupee ended up at 48.07/08 per dollar, recovering more than 2 percent from a two-week low of 49.20 per dollar hit in early deals. It closed at 48.78/81 per dollar on Tuesday and traded in a wide 47.75-49.20 per dollar band for the day.

Talk of central bank intervention above 49 per dollar also propped up the rupee, but two dealers said the selling by some state-run banks was probably on behalf of exporters. "It's a typical December market," said a senior dealer at a foreign bank.

Financial markets are shut on Thursday for Christmas and many foreign banks have wound down their trading positions ahead of the year-end, with only a handful of private and state-run banks active in the market. "Volumes are low, volatility is high and there is only very few players in the market," he said.

One-month volatilities, a gauge for daily fluctuations in the rupee were around 15 percent, a level it has stayed near for most of the month.

The rupee has gained 4.2 percent this month, helped partly by foreign portfolio inflows of $462 million in December, but is down 18 percent in 2008 on equity withdrawals of more than $13 billion. Dealers said dollar demand from oil refiners seen in early trade dried up later, also helping the rupee.

The dollar slipped against the yen and a basket of currencies in thin trade on Wednesday as investors braced for U.S. data that may add to the grim outlook for the nation's economy. One-month offshore non-deliverable forward contacts were at 48.25/48.40, a shade weaker than the onshore rate.