Mumbai: The Indian rupee eased slightly on Wednesday, unsettled by falls in Asian equity markets, though strong capital flows slated for a slew of initial share offerings were expected to limit losses, dealers said.
At 10:30 a.m. (0500 GMT), the partially convertible rupee was at 39.285/295 per dollar, softer than the previous close of 39.265/275.
The rupee hit a peak of 39.16 in November, its highest in almost 10 years, and suspected central bank intervention has blocked attempted tests of the level this week.
“The Indian equity market seems to be pretty strong, compared to the rest of Asia, and is likely to keep attracting investment, which bodes well for the rupee,” said a dealer with a state-run bank.
Asian stocks fell after another day of losses on Wall Street, but the rupee has been supported by the Indian market’s surge to record highs this year on bullishness about the local economy and stocks.
The Sensex hit its fourth record high of the new year as it crossed 21,000 points on Tuesday. It was flat in early trade on Wednesday.
Reliance Power is set to raise up to $3 billion in an initial public offer next week, which would be India’s biggest-ever IPO, and analysts expect capital inflows towards the share offering and other issues in coming weeks could push the rupee to the decade highs the central bank has been defending.
The rupee is also expected to gain support from exporters, who are likely to unload dollar holdings in expectation that the US currency will keep weakening, dealers said.