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Rediff.com  » Business » Rupee closes higher on robust foreign inflows

Rupee closes higher on robust foreign inflows

By Neha Dasgupta
Last updated on: October 31, 2014 17:58 IST
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The rupee shrugged off weakness in major Asian currencies to post a modest gain Friday on strong foreign inflows, reversing the depreciating trend of the last three days.

The Bank of Japan's surpise monetary stimulus strengthened the dollar, causing a slide in the Yen as well as other major Asian currencies and nibbling away at the rupee's gains on the day.

For the month, most Asian currencies reported losses barring the Indonesian rupiah and the Indian rupee.

The rupee rose around 0.7 percent on the month in October tracking easing inflation, a ratings outlook upgrade by S&P and policy steps from the government, which helped propel more dollar inflows as confidence in the Indian economy grows.

Foreign investors have bought around $2.4 billion in both debt and equity so far in October, pushing the total inflows to nearly $36 billion so far in the year.

Analysts expect the local currency to strengthen on continuing foreign inflows, although traders say the Reserve Bank of India might continue to intervene and check the rupee's rise.

"There are FII inflows in both debt and equity and FDI (foreign direct investment) is increasing. But, given the intervention from the RBI, appreciation for INR is limited," said Paresh Nayar, head of foreign exchange and fixed income trading at First Rand Bank.

"The immediate level to watch (out for) is 60.85-60.90 (to the dollar)."

The partially convertible rupee closed at 61.3950/4050 per dollar, a tad stronger from Thursday's 61.45/46. In the offshore non-deliverable forwards, the one-month contract was at 61.53/63, while the three-month contract was at 62.12/22.

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Neha Dasgupta
Source: REUTERS
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