Rupee expected to trade in stable range

The currency may move in a range of 62.8-63.5 against the greenback

After witnessing sharp volatility last week, the rupee is expected to be stable against the dollar, on clear signals from the US Federal Reserve on continuing with its monthly bond buying programme.

Foreign exchange dealers said the US Fed's stance will be positive for foreign capital flows into the Indian stock market. Plus, the growing export and control on the trade deficit for October also gives support to the rupee.

However, much of the demand for dollars from oil marketing companies has moved back to the market and this might exert pressure on the value, dealers added. With a pullback from foreign institutional investors and oil company demand, the rupee had begun to slip move closer to 64 against the dollar last week.

The currency might now move in a range of 62.8-63.5 against the greenback. The rupee had closed at 63.11 on Thursday (the markets were closed on Friday, for Muharram).

N S Venkatesh, head of treasury at IDBI Bank, said the substantial flow of money in non-resident Indian deposits gives strength to forex reserves. FCNR-(B) deposits have received flows of $18 billion, taking the benefit of the Reserve Bank's swap window, which closes at the end of this month.