MUMBAI: The Indian rupee posted its biggest gain against the dollar in more than three weeks on the back of greenback sales by a large corporate and custodian banks, even as other Asian currencies fell due to geopolitical tension from North Korea.
Slight gains in the euro also helped the rupee as the impact of Friday’s weaker-than-expected US jobs data waned, but traders said the outlook for the common currency was clouded by concerns about economic slowdown in the euro zone and speculation the European Central Bank could ease policy.
The rupee could also remain constrained ahead of industrial output and consumer inflation data due on Friday amid concerns high inflation will prevent the Reserve Bank of India from cutting interest rates aggressively despite weakening growth.
“The rupee may appreciate briefly if euro gains, but euro’s problems are not over, so that appreciation will not last. I expect 54.30 to 55.00 range this week. Rupee may break past 55 to touch 55.20 levels in the next one month as fundamentally negatives like political uncertainty and a high current account deficit remain,” he added.
The partially convertible rupee closed at 54.56/57 per dollar versus its previous close of 54.8050/8150. The rupee gained over 0.4 percent on the day, its biggest single day gain since March 15.
Traders said they would continue to monitor share movement in the near term to gauge foreign fund flows. Foreign funds have sold about $ 135 million worth of shares in the last four trading sessions to Friday, stock market regulator data showed.
India’s NSE index edged lower to a near seven-month low as software services exporters fell ahead of what is widely expected to be a lacklustre earnings season.
The euro EUR= was up 0.1 percent at $1.3007, hovering near a two-week high of $ 1.3040 set on Friday after the weaker-than-expected jobs growth data.
In the offshore non-deliverable forward (PNDF), the one-month contract was at 54.89 while the three-month was at 55.54.
In the currency futures market INRFUTURES, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed at around 54.76 with a total traded volume of $ 3.5 billion.
Indian rupee gains strength
