Indian rupee gains for third session on debt-related dollar inflows
The rupee weakened by five paise to 61.48 against the dollar in early trade on Wednesday at the Interbank Foreign Exchange due to increased demand for the US currency from importers.business Updated: Oct 08, 2014 18:48 IST
The Indian rupee gained for a third straight session on Wednesday, largely on the back of heavy foreign fund buying of domestic debt while the International Monetary Fund's upward revision in the country's growth outlook also aided sentiment.
The IMF raised India's growth forecast for the fiscal year to March 2015 to 5.6 percent from 5.4 percent, while trimming its global growth forecast.
Most emerging Asian currencies, however, fell on Wednesday with Indonesia's rupiah at its weakest in more than eight months as concerns over slowing global growth hurt risk assets.
Traders are awaiting the minutes of the U.S. Federal Reserve's September policy meeting due later in the day for immediate direction.
"The IMF forecast for India is good, so there wasn't much panic seen in the domestic markets. Not many domestic triggers likely in the near-term, so expect rangebound trading in the rupee to continue," said Ashtosh Raina, head of foreign exchange trading at HDFC Bank.
"There were good dollar inflows seen in the market today, possibly debt-related inflows. Broadly 61 to 62 should hold on the rupee."
Traders are also awaiting the retail and wholesale inflation data due to be released next week for domestic cues. The partially convertible rupee closed at 61.3950/4050 per dollar compared with 61.43/44 on Tuesday. The rupee had touched 61.3025 on Tuesday, its strongest level since Sept. 26.
Dealers said foreign banks were likely buying domestic debt on behalf of overseas funds on expectations the foreign investment limit in government debt will be raised soon.
Traders will continue to monitor shares for clues on the direction of foreign fund flows. Foreign funds have bought a net $13.95 billion in equities and $20 billion in debt so far in 2014.
In the offshore non-deliverable forwards, the one-month contract was at 61.78 while the three-month was at 62.41.