During the first hour of trade saw the pair getting sold, as exporters were eager to lock in spot close to last Fridays high of 62.54. There were rumours of light intervention from the central bank.
However, the gains in Indian rupee were limited to 62.25 as weakness in domestic equity markets tempered optimism in the currency. Majors were largely unchanged, with Euro and yen clawing back some gains against the US dollar but Pound trading weak.
In economic news today, The 17-nation euro zones final composite output PMI in December, based on surveys of manufacturing and service sectors, posted a reading of 52.1, unchanged from a flash estimate, but slightly above November's 51.7 reading. The December reading rose to its second-highest level recorded in the past two-and-a-half years. The region's service sector PMI reading stood at 51.0, same as the flash reading for the month, but slipped from Novembers 51.2 level. Business saw an increase in new business inflows, although the rate of growth remained modest.
In UK and India however, services PMI slipped in December. In UK service PMI in December was revised down to 58.8 from 60.00 in November, at a six-month low but overall picture paints a robust services sector in the country. In India, business activity contracted at a faster pace in December as new order dwindled.
However, hiring picked up in the services sector, as the December employment sub-index rose to its highest since July, after four months of showing a stagnant labour market. HSBC services PMI slipped to 46.7 from 47.2 in November. A number below 50 indicates contraction.
Outlook: Over the near-term, we can see Indian rupee remaining bracketed between 62.00 to 62.55 with 61.70 to 62.80 being the larger range for the week.
By Anindya Banerjee, currency analyst, Kotak Securities
NOTE: The views expressed are those of the author