Rupee gains on corporate dollar sales; remains in tight band

The rupee hit a one-month high on Thursday on the back of corporate dollar sales and slight gains in domestic shares, but good greenback demand from oil firms and caution ahead of the election outcome next week limited further gains.

Traders expect the rupee to continue to hold in a tight 59.80 to 60.40 per dollar range. Markets could start moving once exit polls are unveiled on Monday evening, although they have proved unreliable in previous elections.

Final results for the polls will be unveiled on May 16.

Markets have priced in a narrow victory for the opposition Bharatiya Janata Party and its allies in the 543-seat lower house of parliament.

"The exit polls should give some sense of direction to markets but the central bank will be present on either sides to curb excessive volatility," said Vikas Babu Chittiprolu, a senior foreign exchange dealer with state-run

Andhra Bank.

The partially convertible rupee closed at 60.0650/0750 per dollar compared with its previous close of 60.135/145.

The rupee rose to as high as 59.9225 earlier in the session, its highest since April 9, on the back of dollar sales by various corporates, while a stronger rupee in the offshore non-deliverable market had helped the local unit in early trade.

The rupee also benefited as shares recovered slightly from their lowest close in 1-1/2 months on Wednesday.

But demand from oil firms and other importers limited the upside.

Traders will continue to monitor foreign fund flows and movement in other Asian currencies in the near-term for direction.

In the offshore non-deliverable forwards, the one-month contract was at 60.36 while the three-month was at 61.06.