Mint St Expected To Keep Lid On Rupee

The rupee is likely to move in a range of 47.35-40 per dollar this week as the Reserve Bank of India (RBI) is expected to continue with its indirect intervention. The RBI perceives the current level of the rupee to be fairly valued on a trade-weighted basis.

But the local unit will gain by a few paise if there is a sudden flow of foreign direct investment (FDI).

Normally, the RBI does not intervene to mop up FDI inflows, but rather takes away trade and corporate dollar inflows. Last week, it had bought around $700-800 million from the market.

Foreign exchange dealers feel the RBI would not allow the rupee to rise beyond 47.34 per dollar.

 

Last week, the rupee touched a new 19-month high of 47.34 against the greenback, but the apex bank did not allow it to appreciate further.

During last week, the rupee traded in the expected range but tested an intra-week high of 47.31 prompting the RBI to buy greenbacks. On Friday, it closed closed at 47.35/36 per dollar, nearly two paise lower than the Tursday