Indian rupee up on inflow hopes, RBI hand seen

MUMBAI (Reuters) - The Indian rupee strengthened on Friday on expectations of capital inflows after the U.S. Federal Reserve's rate cuts, but traders said the gains were checked by suspected intervention by the Reserve Bank of India.

The partially convertible rupee ended at 39.35/36 per dollar, slightly weaker than the day's high of 39.33, its highest since Jan. 21, according to Reuters data.

The rupee ended at 39.38/39 on Thursday and hit a near-decade high of 39.16 percent in November.

Trading volumes for the day were low at $861 million, data provided by Clearing Corporation of India showed.

"It's been a very dull day, not much trading," said Rohan Lasrado, head of trading at HSBC in Mumbai.

"We've seen capital outflows due to the Reliance (Power) IPO, but these have been offset by capital inflows thanks to the dollar losing ground," he added.

Foreign funds were net sellers of $841.6 billion on Thursday, taking total sales to about $4.8 billion in the last 12 sessions, after pouring $17.4 billion into Indian equities in 2007.

The main share index snapped a four-day fall and rebounded more than 3 percent on Friday.

Traders expect demand for local assets to gather momentum in the near term, as a result of the Fed's recent rate cuts.

The U.S. central bank cut rates by a hefty half percentage point on Wednesday, in an attempt to halt a sharp slowdown in the United States.

Flows of foreign capital into India have been a key driver of the rupee's rise.

The RBI limited its intervention in the currency market on Friday, permitting the rupee to gain slightly, dealers said.

India's central bank aims to check the rupee's rise to ensure Indian exports remain competitive.

"The central bank has not been intervening in the market to the level we anticipated, so we've seen a bit of appreciation," Lasrado added.

Pakistani rupee down to more than 6-year low

KARACHI (Reuters) - The Pakistani rupee weakened to a more than six-year low against the dollar on Friday as importers bought the U.S. currency to clear payments, dealers said.

The rupee closed at 62.64/69, its lowest level since October 2001.

Dealers said rising import payments, especially for oil, and outflows from financial markets had boosted dollar demand.

"Demand for dollar is increasing due to oil and gas payments and also because of outflows from the stock market," said a dealer at a brokerage house.

Short-term money rates fell sharply on Friday amid increased cash inflows this week.

Overnight call rates ended at 0.75 percent, down from Thursday's close of 4 percent.

"Yesterday, there was an inflow of 67 billion rupees against an outflow of about 45 billion rupees, so there is still liquidity in the market," said a brokerage dealer.

Dealers said the central bank may conduct a repo on Saturday to mop up liquidity in line with the tightening of the monetary policy for the six months to June 30.

The central bank on Thursday announced an increase in its discount rate to 10.5 percent from 10.0 percent and the cash reserve requirement to 8.0 percent from 7.0 percent, to tackle inflation and widening external and fiscal deficits.

Positional Calls update. 04.02.2008

Buy ABB between 1125 to 1135 T1 1165 T2 1180 T3 1200 SL 1100

Buy BHEL between 2055 to 2070 T1 2150 T2 2200 T3 2275 SL 2035

Buy Century Text between 875 to 880 T1 905 T2 925 T3 975 SL840

Buy Grasim between 3085 to 3100 T1 3180 T2 3270 T3 3310 SL 3000

Buy IDBI between 114 to 116 T1 122 T2 132 T3 140 SL 110

Buy Laxmi Machine between 2040 to 2060 T1 2250 T2 2375 T3 2500 SL 1900

Once NIFTY reaches 5500 to 5650 levels, at that point we will be exiting all our positions & will be booking profits in all our stocks.

4 Feb 08, 10:16
Harsha Vardhan: NIFTY is at Strong Resi... Start booking ur profits.....

4 Feb 08, 10:19
Harsha Vardhan: ABB achived T3 also.... Book Profits....

4 Feb 08, 10:21
Harsha Vardhan: BHEL achived T1 .... Book partial profits...

4 Feb 08, 10:23
Harsha Vardhan: Century Text achived T1... Book partial Profits...