Indian rupee sees biggest weekly gain in 1-1/2 months

Written by Reuters | Updated: Jul 5 2014, 08:07am hrs
The rupee was little changed on Friday as caution set in ahead of PM Narendra Modi's maiden Budget, although the currency posted its biggest weekly gain in 1-1/2 months on strong foreign inflows.

The RBI was also spotted buying dollars, continuing its pattern of intervention to prevent the rupee from gaining sharply as strong foreign flows helped send the NSE index to its record high for a third straight day.

The rupee rose 0.6% for the week, posting its strongest gain since the week of May 16 that saw the election of Modi as PM, although the unit has ceded ground since hitting a three-week intraday high of 59.52 on Thursday.

The budget to be presented on July 10 will be a key test of investors' faith in Modi and his finance minister Arun Jaitley, with markets expecting the government to deliver a fiscally prudent Budget. "The Budget can have a huge impact on the market. Traders will be watching how the government tackles fiscal side problems and inflation," said Hari Chandramgethen, head of foreign exchange trading at South Indian Bank. "The rupee is likely to trade in a range of 59.60 to 60.40 until the Budget," he added. The partially convertible rupee closed at 59.72/73 compared with 59.73/74 on Thursday.