Mumbai: The rupee rose for the third straight day on Friday, tracking higher Asian peers and local stocks, while the euro’s movement versus the dollar will be closely watched for further direction.
The absence of any significant trigger like dollar flows should keep trading ranged, with persistent dollar demand for defence and oil payments likely to put a lid on a sharp rise, dealers said.
At 10:53am, the partially convertible rupee was at Rs. 44.92/93 per dollar, marginally stronger from Thursday’s close of 44.97/98, and is expected to move in a 44.85-45.05 band.
“The rupee will broadly track stocks and the euro today as there are no other triggers. Forwards have also settled now,” said a foreign bank dealer.
India shares extended their early gains to rise to 1%, taking their cues from Asian peers.
Foreign funds were net sellers of Indian shares worth $1.66 billion from 1-18 May, while they had bought a net of about $1.6 billion of shares in April.
The euro held steady against the dollar on Friday, clinging to much of the gains it made the previous day after weak US data underscored expectations that the Federal Reserve will keep interest rates near zero for a while.
The index of the dollar against six major currencies was down 0.05% at 75.083 points. It was at 75.317 during close of the domestic forex market on Thursday.
The one-month onshore forward premium was at 22.50 points from the previous 23.50.
The one-month offshore non-deliverable forward contracts were quoted at 45.17, 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 United Stock Exchange were all at 44.9750, with the total volume at $1.5 billion.
