Rupee - US DOLLAR Exchange update / Gold / Sensex

The Indian rupee on Friday recovered by 32 paise to close at near two-week high of 42.46/47 against the greenback on lack of dollar demand and liberalisation of overseas borrowing norms.

Relaxation of overseas borrowing norms by the government which made it easier for local companies to raise external commercial borrowings (ECBs) mainly pushed the rupee upwards, dealers said.

It also increased the limits to 70 per cent on foreign investment in government and corporate bonds.

Dollar selling by exporters at higher levels and rise in equity markets also helped the rupee recovery.

In active trade at the Interbank Foreign Exchange (Forex) market, the domestic unit opened sharply higher at 42.49/53 a dollar from yesterday's close of 42.78/79.

It later moved in a range of 42.44 and 42.6150 before concluding the day at 42.46/47.

Global crude oil prices fell near USD 126 a barrel from record peak of above USD 135 a barrel last week and this led to a mild demand for dollar from oil refiners.

Strong GDP growth rate of 9 per cent for 2007-08 also boosted the rupee sentiment, expecting more capital inflows in near future.

According to Finance Minister, the growth was quite satisfactory in a year that saw turbulence in money market and corrective steps would be taken to address the slowdown in manufacturing sector.

Firm Asian equity markets also pushed the rupee upwards. The benchmark Sensex rose by over 99 points on Friday.

Rupee / US Dollar Forex Currency News, Gold in India, and The Sensex index on the Bombay Stock Exchange (BSE). Euro / Rupee and Yen / Rupee.

(Updates to trends in the physical market)

* Spot gold little changed at $876.70 an ounce

* London Brent crude down at $125.90 a barrel LCOc1

* Rupee stronger at 42.525 per dollar

* U.S. indicators - personal income and spending data at 6 p.m., consumer sentiment at 7:25 p.m.

MUMBAI, May 30 (Reuters) - India's gold prices were down on Friday tracking a fall overseas and on a stronger rupee, triggering sporadic buying from investors and wholesalers at end of the season, dealers said.

"Demand is okay, but not much," said a dealer in a large private bank.

Foreign gold slipped further, adding to the losses of the previous session, when it fell my over two percent on a declining crude oil and firm dollar.

In the local market a stronger rupee against the dollar, after the government eased overseas borrowing rules, eased gold more as most of India's gold is imported and paid for in the U.S. currency.

"Of course it is not booming, but it is okay," said Rajesh Mehta, chairman of Rajesh Exports Ltd referring to retail sales across his 35 outlets.

India's busy season has now ended and as the monsoon sets in next month, there would be few weddings, keeping demand for gold down.

Yet, investors, wholesalers and jewellers are in the market eyeing good bargains so they can start the next busy season in September with good stocks, dealers said. "Investors would like to buy at around 11,800 rupees per 10 grams," Sanjiv Solanki, a senior trader at M.D. Overseas Ltd, said. US DOLLAR / RUPEE EXCHANGE - GOLD