Indian rupee continued to gain for second day and closed 14 paise up to 66.91 against US dollar on Thursday as demand for high yielding currencies continued from the foreign investors.
“It appears that demand from the central bank is what is preventing Rupee from appreciating too much. Considering the relentless flow in the local bond and equity market and demand for carry trade in NDF market, RBI may have to step up the purchase of US Dollar if it has to prevent a large scale appreciation in the Rupee. Over the near term we expect a range of 66.70/90 and 68.25/30. Nevertheless, a close below 66.70, can cause stop loss selling from exporters and speculators occur, which can then push USDINR towards 66.20/30 region on spot,” said Anindya Banerjee, currency analyst, Kotak Securities.
The Indian currency opened 4 paise up to 67.01 against the US dollar at forex markets. The pound sterling ended higher at Rs 89.51/53 per pound at close of the Interbank Foreign Exchange.
Earlier, dollar’s performance against major currencies also helped rupee gain. The yuan showed marginal change against the dollar on Thursday, as China’s central bank was suspected of intervening in the market to smoothen strong dollar demand ahead of GDP data this week. The spot yuan opened at 6.6890 per dollar and was changing hands at 6.6880 at midday, flat from the previous close.
On Wednesday, the Indian rupee had appreciated by 13 paise to 67.05 against the dollar.
Domestic stock markets were trading flat on Thursday tracking global cues. At 9.15 am, Sensex was trading 1.07 points up at 27,816.25, while NSE Nifty was trading 4.15 points down at 8,515.35.
“Today Bank of England monetary policy meeting is there. Widespread expectation is that there will be a rate cut to counter the recessionary fears post Brexit. India will release trade data for the month of June. May trade deficit was 6.27 bn and if this one is below $8 billion then it will still signify that India continues on Current account surplus territory. Current account surplus is a great stabilising factor for the currency,” Samir Lodha, MD, QuantArt Market Solutions said.