The local unit resumed the day firm at 39.74/75 on heightening possibilities of rate cut by US Federal Reserve, but failed to hold the gains for long and slipped to a low at 39.89 on sustined demand of dollars by exporters and foreign banks, dealers said. The indian currency strengthened in the last two days on the prospect of further Fed rate cuts weighing on the dollar. Reportedly, Federal Reserve Chairman Ben Bernanke signalled a readiness to cut interest rates again, dealers opined.
However, dealers anticipated a spurt in foreign buying of equities and other assets. The prospect of more rate cuts by the US Federal Reserve knocked down the dollar lower in the global market, dealers said. Last week, the Indian currency hit a five month low at 40.25 per dollar.
Meanwhile, the six month premium was quoted lower at 0.20 (0.24) per cent and annualised premium closed at 047 (0.45) per cent and the Reserve Bank of India today fixed the reference rate for the US dollar at Rs 39.81, up by eight paise from previous rate of Rs 39.73.
The Indian unit ended weaker at 60.12/13 (59.72) against the Euro. Rupee closed weaker at 78.93/94 (78.77/78) per unit against the Pound Sterling. It ended at 37.42/43 (37.30/31) per hundred units against the Japanese Yen.