Rupee rises to 55.53 against US dollar

The Indian rupee rose to 55.53/54 compared to its 55.6450/6550 previous close on the back of dollar selling from custodian banks, while greenback demand from oil importers fizzles out at the start of a new month.

It opened low at 55.68 to US dollar against the previous close of Rs 55.64.

Oil refiners had been major buyers of dollars in the domestic currency market over the last few days to meet month-end import commitments.

USD/INR seen in a 55.40 to 55.70 band during rest of the session, say traders.

P. Chidambaram's appointment as new Finance Minister is a positive given his reformist image, but markets wait for actual action, say dealers.

Euro eases against the dollar as disappointment over China's manufacturing data ads to nerves in a market already growing doubtful about whether the Federal Reserve or the European Central Bank will take action to spur their economies.

"People are squaring off positions ahead of the Fed decision in the evening. There are some flows from custodians and corporates as well. Besides oil demand is out," a senior dealer with a private bank said.

The Sensex trading largely flat on the day.

The Indian rupee continues to remain under pressure as the current account deficit stays high. India is a net importer of goods and services and hence has a current account deficit.

Services exports (net) at US$14 billion in Q1 of 2012-13, have declined by about 12 per cent year-on-year. Current indications are that software export earnings may even be lower than projected by NASSCOM. High external debt, deterioration in the net international investment position and a moderate decline in forex reserves have weakened the resilience to external shocks. This is not good news for the rupee.

RBI expects the rupee to stabilize around 53 against the US dollar in fiscal 2013, much stronger than the 55.59 today. The rupee has lost about 8 per cent against the greenback since the start of the current fiscal, hitting a low of 57.33 last month.