Rupee recovers on funds inflows
Mumbai: The rupee surged 20 paise to close at 74.38 against the US currency on Wednesday, propped up by foreign banks' dollar sales and fund inflows into domestic equities. At the interbank forex market, the local unit opened at 74.54 against the greenback and witnessed an intra-day high of 74.30 and a low of 74.55. It finally settled at 74.38, a rise of 20 paise over its previous close. In the previous session, the rupee had tumbled 30 paise to close at 74.58.
"Rupee erased previous day's loss on stronger domestic equities and the weaker dollar index. Dollar selling on behalf of big corporates also added strength in rupee. The market is also positioning for better dollar inflows this quarter amid big bang IPO plans. USD/INR is expected to trade lower in coming days and could find near term support around 74 before heading towards medium-term trend line support of 73.70 while on the higher side 74.70 becomes the resistance," said Dilip Parmar, research analyst, HDFC Securities.
The currency also got support from strong domestic equities. So far this year, foreign investors have infused $482 million into Indian stocks. The dollar index was weak this Wednesday afternoon trade in Asia as traders awaited the release of minutes from the Federal Reserve's December meeting. "Since the start of this year, the USD-INR spot has been steady within a range. The volatility is still low but may pick up especially after tonight's FOMC minutes and Friday's US NFP data, for clues on the Fed's potential pace of the hikes.