MUMBAI: The rupee reinforced for a second meeting on Friday, extending its recovery from record lows hit this week, after the book Bank of India (RBI) paced in to defend the currency and exporters and custodian banks were heavy sellers of dollars.The unit still dispatched its eighth consecutive every week fall, having hit seven consecutive record lows since May 16. Its latest was on Thursday when it dropped to as much as 56.40.
The strong risk aversion from the euro zone has harshly pressured the currency, but falls have been magnified by concerns about India's fiscal and financial outlooks.
A minor alleviating of that risk-off sentiment -- with the euro inching up from two-year lows against the dollar on Friday -- has also assisted the rupee retrieve over the past two sessions.
"The central bank was perceived to have been there to some extent in early trade, but most of the profits today were on the back of hefty selling by exporters," said NSS Mani, chief foreign exchange trader with State Bank of Travancore.
The rupee shut at 55.37/38 per dollar after ending at 55.65/66 on Thursday.
The RBI is accepted to be looking to hold the rupee above the psychologically key grade of 56 to the dollar, and has been glimpsed intervening in the rupee ahead markets, beside its defence of the location rupee.
Some of the dollar trading from exporters throughout the session was believed to arrive from businesses that had missed the central bank's deadline on Thursday to convert half of their foreign currency holdings into rupees.
The outlook for the rupee remains feeble, however, granted anxieties about India's outlook.
The rupee has dropped for eight weeks now, its longest mislaying streak since the 11 weeks of falls that completed in October 2008.
Analysts at Goldman Sachs and Bank of America-Merrill Lynch slash their growth outlooks for India, citing causes such as weak buying into outlook, domestic policy uncertainties and the government's expansionary principle.
signals of fiscal consolidation from the government could help the rupee recover, analysts said.
India appeared to make a greeting sign when it permitted state oil companies to raise gasoline charges, but that unraveled after the government came under critical political pressure, lifting concerns about whether it would be adept to undertake the far more important hikes in fuels such as diesel.
"Any hike in diesel prices would be further affirmative for the rupee and could take it towards 54.60 grades while the topside should be capped at 56.50," Mani added.
Traders said there was good obtaining by exporters in ahead as well, with the six-month ahead premium dropping to 169.75 points from 173.75 points at the open.
The one-month non-deliverable ahead rate was cited at 55.88 while the three month was at 56.62.
In the currency futures market, the most-traded near-month dollar-rupee agreements on the nationwide supply Exchange, the MCX-SX and the United supply Exchange all completed round 55.40 on a total capacity of $7 billion.
