The rupee on Tuesday rallied for the fourth straight trading session to close up by 17 paise at nearly a five-month high of 44.42/43 against the US currency on heavy capital inflow amid sale of dollars by exporters and some banks despite flat equities and a firm dollar overseas.
Dealers said that robust capital inflow was the main reason behind the rise in the rupee value, a dealer said. Exporters and some banks preferred to reduce their dollar position on heavy flow of funds, they added.
Foreign Institutional Investors (FIIs) picked up shares worth over $1.2 billion in seven days since March 22. Meanwhile, the Bombay Stock Exchange benchmark Sensex fell by nearly 15 points to close at about 19,687 in a choppy trade.
Alpari Forex (India) Pramit Brahmbhatt said, "Rupee traded positively at an 5-month high on Tuesday touching a high of 44.39 supported by strong dollar inflows while weaker Asian peers and dollar demand by oil importing companies acted as a deterrent to the strengthening of the Rupee".
"The trading range for the USD/INR will be between 44.25- 44.75 tomorrow," he added. At the Interbank Foreign Exchange (Forex) market, the domestic currency opened strong at 44.44/45 a dollar from last weekend's close of 44.59/60.
Later, it moved in a range of 44.50 and 44.3950 before settling the day at 44.42/43, a net rise of 0.38 per cent. It has risen by 91 paise or 0.41 per cent in a straight four-session of gaining string. Previously, it had closed at 44.31/32 on November 11, 2010.
The US dollar fell for a fifth day yesterday in New York market, touching a five-month low against the euro, as investors awaited this week's meetings of key monetary policy makers while the dollar index of six major rivals was up by 0.04 per cent in European market today.
The rupee premium for the forward dollar ended higher on fresh paying pressure from banks and corporates. The benchmark six-month forward dollar premium payable in September settled up at 149-151 paise from 145-147 paise last weekend.
Far-forward contracts maturing in March also closed strong at 288-290 paise from 280-282 paise previously. The Reserve Bank of India has fixed the reference rate for the dollar at Rs 44.45 and the euro at Rs 63.01.
The rupee fell back against the pound sterling to end at Rs 72.07/09 from last weekend's close of Rs 71.70/72 recovered sharply to Rs 62.94/96 per euro from Rs 63.41/43 previously.
It also shot up against the Japanese yen to 52.68/70 per 100 yen from last close of Rs 53.82/84.