Indian rupee inches lower, expected to remain range-bound

Jul 28 2014, 18:19 IST
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SummaryIndian rupee closed marginally weaker on Monday, marking another sluggish session as us dollar...

The Indian rupee closed marginally weaker on Monday, marking another sluggish session as US dollar demand from importers to meet month-end commitments was offset by greenback sales from custodian banks.

The central bank is also stepping-in to buy dollars when the rupee strengthens, further capping gains. Data late on Friday showed India's foreign exchange reserves rose to $317.85 billion as of July 18, the highest since October 2011.

Traders expect the rupee to remain in a narrow range, unless global events flare up. This week analysts will look for U.S.-focused action, including the two-day Federal Reserve meeting ending on Wednesday and non-farm payrolls figures on Friday.

"We expect the pair to remain in a very narrow range for the near term as all the fund flows are getting absorbed easily in the market," said Unnati Parekh, head of currency derivatives at KanjiForex, a forex brokerage in Mumbai.

She predicted a range of 60.05 to 60.35 for the week, barring major international shocks.

The partially convertible rupee closed at 60.1250/1350 per dollar, compared with 60.1025/1125 on Friday.

The local currency market will remain closed on Tuesday on account of a national holiday.

The rupee has remained supported as foreign portfolio investors have invested $5.18 billion in local shares and debt so far in July.

HIGHLIGHTS

* Rupee ends at 60.1250/1350 per dlr vs 60.1025/1125

* Dlr selling by custodian banks offsets import demand

* INR seen in 60.05 to 60.35 range this week - traders

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