Rupee may not appreciate more due to RBI intervention

Mumbai: The rupee rose on Friday, tracking a rally in domestic shares to record highs, but broader gains were capped as the Reserve Bank of India (RBI) was spotted buying dollars intermittently through the session to cap gains.

Overseas investors bought shares worth a net 13.69 billion rupees on Thursday, provisional exchange data showed, buying for a fifth straight day and bringing their total purchases to $8.3 billion so far this year.

But intervention from the RBI is keeping a lid on rupee gains, sending the currency down 0.1 percent for the week, its second consecutive weekly loss against the dollar.

“The rupee should be held by RBI in a tight range. Ideally it should have been much stronger than it is,” said Ashtosh Raina, head of forex trading at HDFC Bank.

The partially convertible rupee closed higher at 59.17/18 per dollar versus 59.33/34 per dollar on Thursday.

The RBI’s dollar purchases in the spot market and the corresponding paying in the forwards to offset the impact on liquidity have been pushing up the forward premiums.

The one-year premium closed at 501.25 points, after hitting 504.25 points during the session.