Rupee cools off from one week high level; rate cut hopes spur optimism

Indian rupee, despite cooling off from one week high level, has not lost its strength against the American currency, on speculation of central bank slashing key policy rates in its upcoming monetary policy review on June 18, 2012, which besides keeping the equity markets in fine fettle, have also buoyed the sentiment of Indian currency. Slight revival in risk-taking in other Asian markets in absence of any negative news flow, has benefited the emerging market currency. Meanwhile, the rebound of euro from 2 and 1/2 year low level, has also spurred some optimism in the local unit. Hopes that European authorities would seek greater fiscal integration within the euro zone, underpinned the sentiment of the common currency. Back home, however, dollar purchases from oil firms, has kept a check of the gains of the currency.

The partially convertible currency is currently trading at 55.54, stronger by 10 paise from its previous close of 55.64 on Monday. It has touched a high and low of 55.59 and 55.28 respectively. The Reserve Bank of India's (RBI) reference rate for the dollar stood at Rs 55.51 and for Euro it stood at Rs 68.86 on June 4, 2012. While, the RBI’s reference rate for the Yen stood at 71.01, the reference rate for the Great Britain Pound (GBP) stood at 85.2912. The reference rates are based on 12 noon rates of a few select banks in Mumbai.