The Indian currency strengthened to a one-month high against dollar, backed by dollar inflows.
The rupee closed the day at 81.96, up 63 paise from Thursday’s closing level, after testing the day high at 81.9050. It opened the day 35 paise higher at 82.24 against the previous close of 82.59, tracking the overnight non-deliverable forward market.
“The rupee got strength from the beginning of the day as there was approximately $1.8 billion inflows on Adani shares as well as custodian inflows,” said KN Dey, a forex market veteran who advises corporate clients.
“There has also been arbitrage between onshore and offshore for some time where the offshore was lower than the onshore. Hence there was some selling in the onshore market,” Dey said.
Foreign institutional investors purchased shares worth $1.55 billion on Thursday, according to data from the exchanges. US investment firm GQG invested $1.87 billion in four Adani group companies.
Lumpy flows and stop loss selling pushed the pair lower, said Anindya Banerjee, vice president – currency derivatives & interest rate derivatives — at Kotak Securities.
The softer dollar index following a fall in US treasury yield also supported the rupee’s upward journey. The dollar index was down at 104.88 while the 10-year US yield eased a bit to 4.05%.
This local currency bounce was seen at 82.9450 per dollar last Monday.
Over the next week, the rupee is expected to trade within a range of 81.70 and 82.30 against the dollar, said Banerjee.
Dey expects rupee to remain rangebound between 81.85 and 82.50 in March before the closing of the fiscal.
“Normally in March we have less outflows than inflows and the volatility also comes down,” he said.
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