Rupee to strengthen on Moody's stable outlook for India

Currency dealers say capital flows will drive rupee

The rupee is expected to strengthen from current levels against the dollar during the week driven by capital flows, say currency dealers.

Capital flows are expected as global rating agency Moody's said on Tuesday that India's rating outlook is stable.

Moody's said that the outlook on its Baa3 rating for India is stable, in part due to the country's high savings and investment rates.

According to dealers, in the last seven days capital flows slowed down compared with the demand for dollars.

On Tuesday, the rupee opened at Rs 55.54 against the greenback, but weakened from opening levels primarily due to dollar buying by public sector banks to cater to oil importers demand, said Sandeep Gonsalves, forex consultant and dealer, Mecklai & Mecklai.

According to Gonsalves, during the day the trading range will be Rs 55.60-55.75 against the dollar.

At 10:25 am the rupee was trading at 55.69 against the dollar compared with Monday's close of 55.73.

On Monday, the rupee had lost 22 paise to end at 55.73 against the dollar due to sustained demand for the dollar from importers and banks.