Rupee gains on euro, stocks rise; RBI policy eyed
MUMBAI: The Indian rupee strengthened on Tuesday, supported by the euro's gains against the dollar and firmer local stocks.
At 10:30 a.m. (0500 GMT), the partially convertible rupee was at 45.48/49 per dollar, 0.4 percent above its close of 45.67/68 on Monday.
"It might show strengthening bias today, given the EUR's moves and the rest of Asia," said Ananth Narayan G., head of fixed income, currencies and commodities for South Asia at Standard Chartered Bank in Mumbai.
"But the central bank's fears about current account and foreign direct investment will keep the dollar supported eventually," he said.
The euro held near a two-month peak in early Asian trade, with $1.37 firmly in its sight as the market showed only the barest signs of fatigue after a 6-percent rally in the past two weeks.
The dollar index, a measure of the greenback's performance against six major currencies, was down 0.18 percent at 77.910 points.
India's central bank is widely expected to raise rates by at least 25 basis points in its policy at 0600 GMT.
Traders said the rupee was unlikely to be directly impacted by the decision, but would seek direction from the stock market.
The central bank said on Monday inflation may stay high for longer than anticipated earlier due to a rise in global commodities prices and domestic supply side pressures that have recently pushed up food prices.
Indian shares were trading up 0.4 percent on firm Asian peers. However, the main index is down more than 6 percent this month as foreign funds withdrew around $892 million.
"The outlook for capital inflows remains subdued. U.S. stocks are doing very! well, p lus other emerging countries will probably look a lot more promising. Eventually the dollar is likely to move to 46.50, notwithstanding current INR bullishness," Narayan said.
One-month offshore non-deliverable forward contract were quoted at 45.74, weaker than the onshore spot rate.
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 were all at 45.5150, with the total traded volume at about $1.4 billion.
At 10:30 a.m. (0500 GMT), the partially convertible rupee was at 45.48/49 per dollar, 0.4 percent above its close of 45.67/68 on Monday.
"It might show strengthening bias today, given the EUR's moves and the rest of Asia," said Ananth Narayan G., head of fixed income, currencies and commodities for South Asia at Standard Chartered Bank in Mumbai.
"But the central bank's fears about current account and foreign direct investment will keep the dollar supported eventually," he said.
The euro held near a two-month peak in early Asian trade, with $1.37 firmly in its sight as the market showed only the barest signs of fatigue after a 6-percent rally in the past two weeks.
The dollar index, a measure of the greenback's performance against six major currencies, was down 0.18 percent at 77.910 points.
India's central bank is widely expected to raise rates by at least 25 basis points in its policy at 0600 GMT.
Traders said the rupee was unlikely to be directly impacted by the decision, but would seek direction from the stock market.
The central bank said on Monday inflation may stay high for longer than anticipated earlier due to a rise in global commodities prices and domestic supply side pressures that have recently pushed up food prices.
Indian shares were trading up 0.4 percent on firm Asian peers. However, the main index is down more than 6 percent this month as foreign funds withdrew around $892 million.
"The outlook for capital inflows remains subdued. U.S. stocks are doing very! well, p lus other emerging countries will probably look a lot more promising. Eventually the dollar is likely to move to 46.50, notwithstanding current INR bullishness," Narayan said.
One-month offshore non-deliverable forward contract were quoted at 45.74, weaker than the onshore spot rate.
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 were all at 45.5150, with the total traded volume at about $1.4 billion.
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