The rupee closed marginally stronger yesterday, continuing a pattern of range-bound trading as solid foreign inflows into debt and stocks were offset by month-end dollar demand from importers.
Foreign institutional investors have been net buyers of shares and debt for nine consecutive sessions as of Monday, including nearly $500mn on Friday alone, the largest single-day amount since June 9.
Traders are now awaiting the outcome of the US Federal Reserve policy review and US economic growth data later in the day, at a time when the dollar index is trading at six-month highs while the euro is at its lowest since November.
Meanwhile, the Reserve Bank of India is due to hold its policy review on Tuesday, although traders widely expect interest rates to remain on hold.
“We do not see the Fed or the RBI announcing anything unexpected that could alter the near-term outlook for the rupee,” said Uday Bhatt, a senior manager with state-run UCO Bank.
The partially convertible rupee closed at 60.06/07 per dollar, compared with 60.1250/1350 yesterday.
India’s 50-share NSE Nifty rose 0.55%, snapping two days of falls, as some blue-chips rose after their earnings beat estimates.
But strong buying in shares and debt was offset by dollar demand from importers to meet month-end commitments, which is likely to persist through most of this week.