Rupee stronger, but euro watched

MUMBAI: The rupee rose slightly onWednesday, as traders watched for further signs of recovery in the euro, butchoppy domestic stock markets limited the gains.

The partiallyconvertible rupee ended at 46.17/18 per dollar, slightly stronger than itsTuesday close of 46.2350/2450. It traded in a band of 46.14 to 46.35 during theday. "The rupee drew its strength from the euro's rally in late New York tradeon Tuesday. But choppy stocks made it tough for the rupee to climb," said asenior dealer with a foreign bank. "I see the rupee in the 46.15 to46.35-a-dollar range tomorrow," he said.

The euro held steady onWednesday after rising 0.1 per cent in late US trade on Tuesday. A sharp fall inUS stocks the previous day and a subsequent drop in the Nikkei helped supportthe dollar and the yen. The dollar index against six other major currencies fell0.2 per cent at the time of close of local trading.

Other Asiancurrencies were pressured as expectations of a strong impact from China's yuanpolicy receded and weak US home data renewed worries about the global recovery.The benchmark BSE share index <.BSESN> erased early losses to close almostflat. Foreign funds have bought a net $1.4 billion worth of shares in June afterdumping around $2 billion in May.

The flows have a large impact onthe rupee's fortunes and are watched by investors. Foreigners are net buyers of$6 billion in 2010. Traders also awaited the US Federal Reserve's rate decisionlater on Wednesday. The Fed is expected to keep rates on hold and restate itsintention to keep rates near zero for an extended period.

One-monthoffshore non-deliverable forward contracts were quoted at 46.29, weaker than theonshore spot rate. In the currency futures market, the most traded near-monthdollar-rupee contracts on the National Stock Exchange and MCX-SX ended at46.2050 and 46.2075, respectively, with the total traded volume on the twoexchanges at about $7.1 billion.