Rupee recovers sharply against US dollar

MUMBAI: A recovery in the equity markets helped the rupee to recoup sharply to 40.3750/3850 against the US currency in om Tuesday morning deals.

In quiet trade at the Interbank Foreign Exchange (Forex) market, the Indian unit opened firm at 40.34/36 a dollar from Monday's close of 40.41/42 per dollar but later moved slightly downwards to 40.3750/3850 a dollar.

A sharp recovery of nearly 239 points in the benchmark Sensex mainly helped the rupee to bounce back after overnight decline.

Forex dealers said that expectation of a fall in global crude price, which is below 72 dollars a barrel, gave a boost to rupee. Low crude prices mean that oil companies, which meet most of the demand through imports, will have to pay less to international refiners.

Lack of any intervention by the Reserve Bank of India (RBI) also boosted the rupee sentiment, they said.
    
However, according to them, the upsurge in the rupee might be restrained following sustained capital outflows and gaining dollars against its major rivals on Monday.