'Rupee to be range-bound this week, to trade at 64-64.50'
The rupee is likely to trade in the 64-64.50 range this week on continuing foreign fund inflows, dollar sale by exporters and higher demand for the American unit from importers, say treasury heads at banks.
Mumbai: The rupee is likely to trade in the 64-64.50 range this week on continuing foreign fund inflows, dollar sale by exporters and higher demand for the American unit from importers, say treasury heads at banks.
Market experts say the Reserve Bank, which has been intervening in the market to contain volatility in the rupee, will remain proactive.
"Overall the rupee has been strengthening this year due to higher foreign fund inflows due to reforms like GST. But now exporters are also selling dollars on one hand and they are started covering (buying dollars) their position on the other," FirstRand Bank Treasury Head Harihar Krishnamurthy told PTI.
The rupee is likely to move in 64-64.50 range against the greenback this week, he said.
On Friday, the rupee fell to 64.38 against the dollar from Thursday's closing of 64.18. The domestic unit has been moving in the 64-64.70 range in the past few weeks.
According to official data, between January 1 and May 6, foreign funds pumped in a whopping Rs 40,345.67 crore into equities, and Rs 50,537.23 crore into debt, taking their overall position to Rs 90,882.90 crore so far this year.
With over 17.5 percent returns, the BSE Sensex, which scaled the 30,000-mark late April for the first time, has been the best performing index in the world, while the NSE Nifty too closed at fresh lifetime highs in the month.
"Current direction of rupee is of appreciation which is defying the market sentiment. The sentiment is that the rupee should depreciate due to geopolitical uncertainties," says a senior treasury officer at a state-run bank.
Bankers say RBI, through nationalised banks, is buying and selling the rupee to avoid excessive volatility on a regular basis.
"We see that the rupee movement is controlled by the central bank. They are trying to hold the rupee at the current levels," said a foreign exchange dealer with a state-run bank.
Economic Affairs Secretary Shaktikanta Das recently said government did not have any target for the rupee and would leave it to the market. He attributed the ongoing surge in the rupee to the growing strength of the economy.
"The value of the rupee is market-determined and so far as the government is concerned, we do not have any fixed value of the rupee. So, the market will decide," Das, who is in the Japanese city of Yokohama to attend ADB's annual meeting, told the media on Friday.
In a recent report, rating agency Icra said one of the main reasons for the rupee's surge is the fall of the dollar against the euro, which between the last week of March and the last week of April rose 2 per cent, while the rupee gained just 1 per cent against the dollar.
In fact, emerging economy currencies like the rupee, Malaysian ringgit, the Philippine peso, South African rand and Turkish lira have strengthened against the US dollar during the same period, the report said.