Indian Currency Relieves On Oil Buying, RBI Intervention Worries

Mumbai: Dealers told that the Indian currency relieved, on Thursday, as oil firms purchased US dollar and as worries about RBI intervention weighed on persuasion, but trading was dense ahead of a public holiday.

After market closure on Wednesday, the central bank (RBI) stated that it has raised the limit for issuing intervention bonds to 2.5 trillion rupees from 2 trillion rupees.

On Thursday, the partially convertible Indian currency closed at 39.325/335 per dollar, as compared to its last closure of 39.30/31 on Wednesday, when it hit its record high of 39.16.

Stock markets will be closed on Friday due to Diwali.

A senior trader with a private banking institution said, “Many companies were closed today for Diwali, and there wasn't much happening for most of the day.”

"Apart from some initial jitters, the market seems to have brushed off the increased MSS ceiling," the dealer added, referring to the so-called Market Stabilisation Scheme bonds.

Up to August 2007, the RBI has purchased $40 billion, and is supposed to play an active role in diluting the rupee’s appreciation in recent months.

In the existing year (2007), the rupee has made around 12.5% versus US dollar on the back of huge massive capital inflows, many slated for the record-setting stock market.

The BSE Sensex ended on a weak note, on Thursday, as credit jitters roiled worldwide markets.

The traders said that still, losses in the rupee were partial as exporters sold dollars, revering further attrition in the U.S. currency's value.

The US currency closed at its record lows versus the euro, as the stock market expected to observe whether the European Central Bank would voice worry about the sharp rally in the single currency.