The Indian rupee ended unchanged on Tuesday after two sessions of gains, although investors remained bullish on the prospects of the local unit on the back of the government’s new reforms push.
The rupee has rallied 2.6 percent over the previous two sessions, buoyed by a suddenly emboldened government pushing ahead with a hike in diesel prices, as well as with action to attract foreign direct investments.
The government’s renewed resolve, along with the Federal Reserve’s new asset purchase programme, have already increased equities inflows.
Indian stocks have attracted 51.1 billion rupees ($949.37 million) in net foreign inflows in the last two sessions, or about half of the amount received for all of August.
This is the scenario that we have been talking to with advisors here at Excel Funds as well. The evaluations in India have been at an all time low and represents
Great buying opportunities to investors. The recent rally on the Rupee and gains in the Sensex have been consistent with our forecast in the near term in the India market.
“The sentiment has changed for the rupee. Any bounce in the USD/INR will be used to sell dollars,” said Hemal Doshi, currency strategist at Geojit Comtrade.
The rupee closed trade at 54.01/02 per dollar, as per the State Bank of India closing rate, unchanged from its previous close.
It traded in a 53.96-54.375 range during the session in a volatile session.
Traders cited heavy dollar demand from a large mutual fund house looking to meet redemptions in the morning session, but the rupee recovered most losses and briefly even gained on the day on the back of dollar sales from foreign funds.
The rupee could see gains in the days ahead as technical charts show the break of 54.03-18 for the USD/INR as significant, opening the way for a test of 52.95.
In the offshore non-deliverable forward market, the one-month contract was at 54.18 while the three-month was at 54.70.
In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed at around 54.04 with a total traded volume of around $5.6 billion.
Written by Sam A.