Rupee firms up to 45.81 on RBI comment

The Indian rupee rallied strongly in Friday afternoon trade from the morning's record low after the Reserve Bank of India said it was considering asking exporters to speed up their remittances. The rupee closed at 45.81 per dollar, up from a lifetime low of 46.08 hit in the morning, but weaker than an intra-day high of 45.75.

"The RBI's comments flushed out all the inter-bank long dollar positions. The impact from the exporters' side will take place after a lag after the directive actually happens," said a dealer at a private bank.

A central bank official said that the RBI was exploring the possibility of asking exporters with large foreign currency holdings to speed up their inward remittances. The official estimated such holdings at around $2 billion.

Dealers said corporates were, however, still buying dollars on declines and this limited the rupee's upside.

"The rupee has tested 45.80 per dollar several times but is unable to break this barrier on account of the corporate activity," said a dealer at a state-run bank.

Forward premiums declined after the RBI did not raise repo yields.

The annualised one-month forward premiums fell to 6.86 per cent from the morning's high of 7.43 per cent.

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