The Indian Rupee reversed a three-day decline against the US Dollar on Wednesday as inflows of the ‘Greenback’ related to foreign companies and funds offset month-end demand for the currency from importers.
The Rupee also received support from speculation that the Reserve Bank of India had intervened on the markets, albeit not as aggressively as it has done in previous weeks.
“There was good Dollar selling seen today, likely some corporate flows as well. Foreign banks were mostly on the sell side while there were importers and state-run firms seen bidding. There is a good technical support for the pair at 58.35 levels; if that level is broken we can expect the pair to fall further and head back towards 59.50 again,” said a foreign exchange dealer with Federal Bank.
Traders are expected to keep their attention focused on measures introduced by new Prime Minister Narendra Modi.
According to data overseas funds bought a net $5.3 billion of Indian equities and bonds this month through yesterday. The Rupee had declined earlier in the session on speculation that importers stepped up their Dollar purchases in order to pay month-end bills and also as the central bank eased rules for importers.
“Strong foreign inflows into markets are aiding the Rupee. Also the Dollar demand from importers at the start of the session seems to have subsided,” said a currency strategist at FirstRand Ltd.
The US Dollar was being supported by yesterday’s positive durable goods orders and improved consumer confidence data.
Indian Rupee Exchange Rate
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,Indian Rupee,98.6665 ,
US Dollar,,Indian Rupee,58.9300 ,
Euro,,Indian Rupee,80.1802 ,
Australian Dollar,,Indian Rupee,54.3806 ,
[/table]
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