Rupee inches higher; month-end dollar demand offsets inflows

By Swati Bhat

MUMBAI (Reuters) - The rupee closed marginally stronger on Wednesday after being held in a tight range as dollar inflows into the domestic share markets were offset by demand for the greenback from importers looking to meet month-end commitments.

Sentiment was also cautious ahead of the release of July-September economic growth data on Friday and the Reserve Bank of India's monetary policy review on December 2.

India’s economic growth probably slowed to 5.1 percent in the July-September quarter from a year ago, but economists polled by Reuters doubted whether that would be enough to persuade the central bank to cut interest rates just yet.

"We are likely to see the rupee in a 61.70 to 62.10 range this week as rising dollar demand towards month-end may hurt the rupee," said Param Sarma, director and chief executive officer at NSP Forex, a consultancy firm.

"Rupee resistance has now gradually shifted to 61.50 from 60.00 earlier as we see good dollar buying from exporters and the RBI at that level. We are likely to see the rupee remaining broadly stable between 61.50 to 62.50 until year-end," he added.

The partially convertible rupee closed at 61.8450/8550 per dollar versus Tuesday's close of 61.86/87.

Moves in the domestic share market will also be crucial for cues on foreign fund flows. Shares gained for a fourth session in five, led by blue chips on hopes the central bank would cut its key policy rate.

In the offshore non-deliverable forwards market, the one-month contract was at 62.20 while the three-month was at 62.73.

(Editing by Biju Dwarakanath)