Rupee gains against dollar, backed by stock market gains

Forex tips: The rupee strengthened and hit day's high of 62.49 against the dollar in trade today at the Interbank Foreign Exchange on fresh selling of the US currency by exporters and banks. Forex dealers said besides selling of the American currency by exporters and banks, a higher opening in domestic stock market supported the rupee but the dollar's strength against other currencies overseas, limited the gains. Rupee had eased by two paise to close at fresh two-month low of 62.78 against the Greenback in yesterday's trade on sustained demand for the US dollar from importers.

To protect forex reserves, RBI may offer only limited support to rupee

A strong dollar has hit all emerging currencies, including the rupee in the past few days.However, currency traders and economists expect only limited dollar sales by the Reserve Bank of India (RBI) to stem the rupee's fall, as such an intervention may thwart the central bank's efforts to shore up forex reserves. The central bank intervenes both ways -it buys the US currency to check sharp rupee appreciation and sells to rein in the local unit's deep depreciation. Stated policy is to intervene only to curb excess volatility. The RBI has been buying dollars in the past few months to shore up forex reserves after it had used them to arrest the rupee's sharp plunge two years ago.

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