Heavy FPI inflows into IPOs offset stronger greenback impact
Rupee pares early losses, ends flat at 74.87/USD; USDINR may remain range bound in a holiday-shortened week
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Mumbai: The rupee pared its initial losses to settle almost flat at 74.87 against the US dollar on Monday as heavy FPI inflows into IPOs were offset by a stronger greenback in overseas markets and firm crude oil prices. A strong rally in the domestic equity markets helped the local unit pare losses. At the interbank foreign exchange market, the domestic unit opened on a weak note and slipped below the 75 per dollar mark due to sharp gains in the dollar index.
The rupee touched a low of 75.04 and a high of 74.84 during the day before closing at 74.87, up 1 paisa from its last close. On Friday, the rupee had closed at 74.88 against the US dollar. Sriram Iyer, senior research analyst at Reliance Securities, said: "The rupee ended flat against the US dollar as foreign fund inflows into local IPOs offset the impact of a broad dollar strength. Markets were range bound ahead of the Federal Reserve meeting this week. A taper announcement by the US Federal Reserve appears certain but investors will look for cues from details about the reduction of the asset purchases." In the overseas markets, most other Asian and emerging market currencies had come under pressure earlier in the session, following a jump in the dollar index on Friday and this Monday afternoon in the European session.
"Rupee traded in a range as dollar index and crude prices traded flat, eyeing the US Fed's statement on tapering updates which would give further direction to dollar prices and related currencies," adds Jateen Trivedi, senior research analyst at LKP Securities.
"The USDINR spot closed flat as heavy FPI flows into the IPOs were offset by rising US Dollar Index and suspected RBI intervention. USDINR is expected to remain range bound in a holiday-shortened week," said Anindya Banerjee, DVP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose by 0.02 per cent to 94.14.
