Mumbai: The Indian rupee resumed this week’s rally on Thursday on the back of the dollar’s weakness against majors and firmer local stocks, after easing in the previous session.
At 10:17am, the partially convertible rupee was at Rs46.22/23 per dollar, 0.3% firmer than Rs46.345/355 at close on Wednesday when it had touched Rs46.1375 during trade, its strongest since 26 November.
“The rupee is unlikely to break the Rs46.14 mark today as equities are not so bullish, but the dollar index is supporting,” the head of foreign exchange trading at a large private bank said predicting a range of Rs46.15-46.30 for the early part of the day.
He said European sharemarket open post 1:30pm, would decide the direction for local shares and would also indirectly determine the rupee’s direction in the latter half.
Other dealers said they would watch the dollar index for a break below 74, which would lead to a rally in Asian currencies.
The dollar index, reflecting the unit’s performance versus six majors, was 0.2% lower at 74.50. Asian units were mildly weaker against the dollar.
The yen and the dollar fell on Thursday after Bank of America said it would repay $45 billion of taxpayer bailout funds, boosting investor confidence and trimming safety bids in those currencies.
Indian shares rose more than 0.7% led by Reliance Industries and Bharti Airtel, tracking the gains in Asian shares.
Foreign fund flows into local stocks are critical in determining the rupee’s fortunes. The unit has rebounded 13% from a record low of 52.2 in early March on foreign portfolio inflows of $15.9 billion in 2009.
One-month offshore non-deliverable forward contracts were quoted at Rs46.21/25, little changed from the onshore spot rate.