The rupee on Thursday closed at a fresh three-week high of 63.90 to the greenback due to some dollar selling by exporters. Dealers indicated that exporters were cashing out their dollar reserves on any movement of the rupee towards 64 levels because of which the currency has seen a strong support near these levels. On an intra-day basis, the rupee hit 63.89. The rupee has so far provided a year-to-date return of 6.28%, which is higher compared to most of its emerging market peers. The Indonesian rupiah gave return of 0.982% while the Chinese renminbi’s return was 5.208%. The Malaysian Ringgit logged return of 5.03%, the Brazilian Real 2.98% and Russian ruble gave return of 5.34%.
Fund inflows have also been upbeat, with foreign portfolio investors (FPIs) putting in $19.85 billion into Indian debt so far this year. FPI investments into equity stand at $7.09 billion. Some amount of this stock market rally is also believed to have contributed towards the rupee’s appreciation. Furthermore, with five insurance IPOs being lined up over the next few months, bankers are expecting at least $1.5 billon of inflows from foreign investors in these issues which is likely to push the rupee higher.
However, the GDP data released on Thursday was below expectations following which dealers are expecting a minor correction in the dollar/rupee pair. “The rupee might see some correction following the release of the GDP data. But we expect the currency to touch 63.50 levels in some time,” said a currency dealer.