Rupee crawls higher on capital inflows

The rupee nudged higher on Friday as the prospect for capital inflows got a boost from stronger US economic data and indications for a Greece bailout.

At 10:46 am, the rupee was 49.21/22 to the dollar, compared with the previous close of 49.29/30.

"Overall, we can expect the rupee to move towards 49 as inflows are likely to stay strong and the global mood is positive," said Naveen Raghuvanshi, associate vice-president of foreign exchange trading at Development Credit Bank.

He expects resistance for the currency around 48.88.

The rupee has strengthened 7.7% so far in 2012 on the back of nearly $8 billion invested by foreign funds in Indian stocks and debt. It had dived around 16% in 2011 and touched a record low of 54.30 on December 15.

The main stock index Sensex was up 1.2%, taking gains since the end of 2011 to almost 19%.

Higher global oil prices initially weighed on the rupee and Raghuvanshi said demand for dollars would go up if prices stayed high. India imports about 80% of the oil it consumes and the refiners are the biggest buyers of dollars.

Brent crude was above $120 a barrel on Friday, rising for a fifth day, on supply worries from Iran.

One-month offshore non-deliverable forward contracts were at 49.57.

In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were all around 49.31, on total volume of $869 million.