Rupee at 1-month high, up 7 paise at 59.04

After another day of volatile trade, the rupee on Friday appreciated by seven paise to close at a new one-month high of 59.04 against the dollar as the RBI's liquidity-tightening measures continued to lend support.

At the Interbank Foreign Exchange Market, the rupee opened strong at 58.82 a dollar from the previous close of 59.11 and strengthened to 58.69 on initial gains in local stocks. Later, it fell to a low of 59.10 before closing at 59.04, a rise of seven paise or 0.12 per cent -- its third day of gains.

Although the rupee strengthened above the 58 mark for the second day, it was unable to sustain those gains. On Tuesday, the Reserve Bank had announced additional liquidity-tightening measures to contain excessive speculation and volatility in the foreign exchange market.

"The currency continued to get the boost from the number of measures taken by the RBI in last 10 days," said Abhishek Goenka, founder & CEO of India Forex Advisors. "It indicates that the central bank is not ready to see the rupee weakening and will take every possible step to stem the fall."

The benchmark S&P BSE Sensex dropped 56.57 points, or 0.29 per cent. FIIs pulled out a net Rs 442.94 crore yesterday, as per provisional data with stock exchanges.

The dollar index was down by 0.10 per cent against six major global rivals. "The trading range for the spot USD/INR pair is expected to be within 58.65 to 59.35," said Pramit Brahmbhatt, CEO of Alpari Financial Services (India).

Forward dollar premiums declined further on sustained receipts by importers. The benchmark six-month forward dollar premium payable in December moved down to 224-229 paise from Thursday's close of 228-233 paise. Far-forward contracts maturing in June dropped to 440-445 paise from 451-456 paise.

The RBI fixed the reference rate for the dollar at 58.9133 and for the euro at 78.2180. The rupee fell to 90.98 against the pound sterling from the previous close of 90.33 and dropped to 78.36 against the euro from 77.99.

It remained weak against the Japanese yen at 59.88 per 100 yen from the previous close of 59.25.