Due to offsetting inflows and regular dollar demand, the Indian rupee finished Monday hardly moved, remaining mostly rangebound at the beginning of the week.
The rupee ended at 90.65 from its previous finish of 90.6350 after moving in a narrow 10-paise band.
The euphoria surrounding the U.S.-India trade pact helped the rupee soar earlier this month, but it is now once again reflecting flow dynamics and outside indicators. Dollar sales by exporters and foreign portfolio inflows have helped the currency rise 1.5% so far in February.
“The rupee is not racing. Amit Pabari, general director of the FX advice company CR Forex, stated, “It is waiting.” Technically speaking, the 90.00–90.20 range is still a crucial support for the USD/INR, and he stated that a slow move in the near future towards 91.00–91.20 is still feasible.
Foreign investors pulled out more than $800 million on Friday, indicating that flows are still erratic even though they have been net buyers of Indian stocks for the month.
The likelihood of at least two more rate cuts from the Federal Reserve has increased due to the U.S. inflation report being softer than anticipated. In a note, Citi stated that investors in stocks should feel better since the concern of the rupee’s rapid and ongoing fall appears to have subsided.
According to the brokerage, even in the absence of an absolute appreciating bias, some investors are prepared to take into account rupee outperformance on a relative basis.
