Indian rupee recovered from early lows on Monday helped by dollar sales from some foreign banks, but month-end greenback demand from oil importers is seen keeping gains in check.
The USD/INR may however continue to make a gradual upmove towards 53 as macroeconomic concerns continue to abound, whether it be stalled financial sector reforms, slowing economic growth and capital inflows. The rupee is currently at 52.03/04, after closing at 52.07/08 on Friday. It fell to 52.15 in early trades.
The dollar is trying to achieve a foothold above the 52.12-20 resistance zone, which is the 61.8 percent of the December-February fall, and also acted as initial support on the dollar's decline from the record 54.30 peak.
Once attained, it will open the next retracement objective at 52.95-53.00.
Many traders expect the central bank to intervene around 52.50, but don't predict a strong defense of the currency given the underlying weak economic sentiment and shallow dollar reserves.
Finance Minister Pranab Mukherjee in an interview to Reuters sought to calm down frayed nerves saying key reforms will be pushed through in 2012 despite an apparent political gridlock.
