The Indian rupee ended firmer on Monday, as the euro rose against the dollar ahead of fresh US economic data and dollar sales by exporters and non-resident Indians. The partially convertible rupee ended at 46.50/51 per dollar, about 0.11 percent higher than Friday's close of 46.55/56.
But the rupee, which analysts say is overvalued by about 3 percent on a trade-weighted basis, has weakened by 3.14 percent in 2006. Dealers said dollar selling came at the day's low of 46.57. "There was a rush of (dollar) inflows at this level. Bulk of this was from exporters and remittances by non-resident Indians, residing in the Gulf," said a dealer with a private bank.
Dealers said exporters were selling heavily in the forwards, which helped boost sentiment for the spot rupee. The inflows helped offset some of the earlier losses caused by the yen's drop against major currencies.
The yen hit a new low against the euro on expectations the Bank of Japan may take its time raising interest rates, while dealers said the minutes of the Federal Reserves' August 8 meeting could shed light on whether the US central bank may leave interest rates unchanged at its next meeting.
The Fed minutes are due on Tuesday. On Friday, the US August jobs data will be published. The Fed left interest rates unchanged in its August 8 meeting, ending its two-year rate tightening campaign. Some currency traders expect the rupee to inch up on Tuesday, if crude prices fall further. Oil prices traded above $71 a barrel on Monday.
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