The Indian Rupee strengthened against the Pound and US Dollar on Friday as demand for foreign currency from oil companies fell and increased Dollar inflows supported the currency’s exchange rate.
On Friday two large corporations brought in large sums of Dollar inflows into the Indian market bolstering the strength of the Rupee.
“It looks like there were some strong corporate inflows towards noon. This coupled with the absence of demand seems to have aided the Rupee,” said a senior forex dealer at FirstRand Bank Ltd.
Since the beginning of this year, the rupee has gained 1.84%, while foreign institutional investors (FIIs) have bought $4.87 billion during the period from local equity markets.
Also supporting the Rupee against the ‘Greenback’ was the heightened concerns over the situation in Ukraine. Tensions between the West and Russia increased after US secretary of state Jon Kerry warned Russia that it would pay a heavy price for interfering in eastern Ukraine.
A report which forecasted that this year’s monsoon rains will be below normal levels could add pressure to the Indian economy and weaken the Rupee.
According to the report compiled by the Indian Meteorological Department, this year’s monsoon rains will be below normal June to September levels as a result of the El Nino effect.
A lack of rain is likely to heavily impact India’s agriculture sector and could stoke inflation and hit an economy which is dependent on the rains due to half of the nation’s farmland depending on the rains.
The next major piece of domestic data out of India is next week’s manufacturing PMI data due on Friday.
Indian Rupee (INR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,Indian Rupee,101.9450 ,
Euro,,Indian Rupee,83.8548,
US Dollar,,Indian Rupee,60.5800 ,
Australian Dollar,,Indian Rupee,56.2340 ,
[/table]
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