The Indian rupee extended gains for a second session on Thursday, largely mirroring equity moves in a subdued trading session, with the focus gradually shifting to the central bank's rate meeting next week. The currency gained early, rising to 61.355 to a dollar, on the back of strong gains in local shares which breached the key 21,000 mark for the first time in nearly three years.
Subsequently, the rupee pared gains as shares turned negative with traders booking profits. The rupee has been a big recipient of foreign fund inflows as weak data out of the United States pushed back expectations of any tapering of the Federal Reserve's extraordinary stimulus to 2014. "The rupee has been stable and largely tracking the euro. A rate hike on Tuesday will be negative for the rupee," said Naveen Raghuvanshi, associate vice president at Development Credit Bank.
The rupee closed at 61.46/47 per dollar, compared with 61.59/60 on Wednesday. It traded in a 61.355-61.69 band in the session. In the offshore non-deliverable forwards, the one-month contract was at 61.96, while the three-month was at 62.93. In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed at around 61.48 with a total traded volume of $1.97 billion.