The Indian rupee that hit a four-month high on Tuesday closed 30 paise higher at 66.52 level against the US dollar at the Interbank foreign exchange (forex) market following increased selling of American currency by banks and exporters. The local currency had opened at 66.54 level and had closed at 66.82 against the US dollar on Friday. The forex markets were closed on Monday following Ganesh Chaturthi festivities. The Indian currency also gathered support from the domestic markets that opened firm following global cues, and sustained foreign inflows. Sensex jumped 445.91 points to settle at 28,978.02, while NSE Nifty soared 133.35 points to close at 8,943.
“September started off on a positive note for Indian Rupee as the pair has already gained nearly a per cent against Greenback. Some major inflows were noted from FPIs as well as from a couple of large corporates but demand from central bank did not allow the local unit to gain further ground. Seasonally Rupee is in one of the strongest periods as over the past 14 years, in 11 years Rupee has appreciated between 1-2% against USD over the month of September, ” Anindya Banerjee, currency analyst, Kotak Securities said.
Dollar’s weakness against emerging market currencies after last week’s below-par US growth data also supported the rupee. US Dollar Index declined marginally in Friday’s trading session as unfavourable economic data from the country kept pressure on the currency. US markets were shut on Monday on the eve of Labor Day holiday.
Banerjee further added unless US Fed decides to push for a hike in September or China opts for a large scale devaluation of their currency, Rupee remains a favoured currency on the back of momentum driven inflows into local debt and equity markets. A low probability should be attached to the former but as far as the latter goes, it is a risk which we have to carry always, as Chinese economic/political shock remains an any time event. All in all Indian Rupee may gain further ground against US Dollar, possibly appreciating towards 66.10/20 levels on spot. Resistance is expected to be around 66.80/67.00 levels on USDINR spot.