Rupee ends higher on dollar inflows; Fed's testimony to lawmakers in focus

By Sethuraman N R

BENGALURU (Reuters) - Indian rupee ended stronger on Wednesday, shrugging off weakness in Asian peers, aided by continuous dollar inflows into the domestic share market.

The rupee closed at 82.0375 to the dollar against a close of 82.1175 on Tuesday.

Some Asian currencies including the Chinese yuan and the Thai baht were down 0.2%-0.3% and the Korean won fell about 1%.

The rupee has started to trade in a very narrow range of 81.80-82.30 and unless that range breaks there is no direction, said Gaurang Somaiya, forex and bullion analyst at Motilal Oswal Financial Services.

There were likely dollar inflows, with a major public sector bank and foreign bank selling, two traders said.

Foreign investors have poured about $1.8 billion into Indian equities this month, having bought shares worth $5.1 billion in May.

India's BSE Sensex hit a record high on Wednesday on persistent inflows from foreigners on the back of strong macroeconomic data such as easing inflation and robust domestic growth.

The dollar index was firm at 102.570 ahead of the U.S. Federal Reserve Chair Jerome Powell's testimony to lawmakers later in the day. The Fed, last week, kept rates on hold, but the projections put out by policymakers indicated two more rate hikes this year.

As markets look for clarification following mixed messaging from Fed's dot plot last week, a hawkish clarification would reinforce the higher rates for longer narrative, OCBC analysts said in a note.

 

(Reporting by Sethuraman NR in Bengaluru; editing by Eileen Soreng)