Rupee unlikely to maintain rally, to be range-bound: Experts
The rupee, which rallied to a three-month high last week, is unlikely to maintain the momentum this week due to higher demand for dollars from importers and rise in the greenback after strong non-farm payrolls data in the US last week, say bankers and experts.
"The rupee is at the 61 level, and at this level we will see lot of buying coming in from importers," said KN Reghunathan, treasurer at the state-run Union Bank of India.
Last week, the rupee remained in appreciating mode for most of the sessions, supported by higher inflows from overseas investors and as a massive improvement in the current account deficit (CAD) in the December quarter.
The current account deficit narrowed to $4.2 billion, or 0.9% of GDP, in the December quarter on the back of rise in exports and fall in gold imports, according to the government data.
The rupee ended at a three-month low of 61.07 against the greenback on March 7. During the day, it touched an intra-day low of 60.90. From the life-time low of 68.85 recorded on August 28 last, the rupee has rallied 11.3% since then.
Analysts said the rupee is likely to open on a weaker note on Monday on concerns over early withdrawal of monthly asset purchases by the US Federal Reserve, as the better than expected jobs data may force the Fed to speed up tapering.
The US economy added in 175,000 non-farm payrolls in February as against an addition of 129,000 in January.
"A strong jobs data show that the US economy is recovering and so tapering will be faster than expected. I see the rupee to be under pressure and might open at 61.20 on Monday," said a senior forex dealer with a state-owned bank.
Bankers also see the Reserve Bank buying dollars from the market if the rupee rises above 60.50 level to replenish the forex reserves.