Mumbai: The Indian rupee moved in a tight band on Wednesday as mild losses in the local sharemarket and a largely steady dollar versus majors failed to provide clear direction.
At 9:40am, the partially convertible rupee was at Rs46.20/21 per dollar, slightly below its Tuesday’s close of Rs46.2350/2450. It opened at Rs46.30 and has traded between Rs46.1750 and Rs46.32. However, it was mostly held between Rs46.20-25.
“The rupee should hold in a 46.15-46.40 range today. Moves in the euro, yuan and equity markets will be closely monitored for direction,” a senior dealer with a foreign bank said, adding a slightly stronger fixing for the yuan was rupee positive.
The level of the mid-point of the yuan is closely watched by investors to see if it is used by China’s central bank to guide the value of the yuan in one direction or the other.
Indian shares were trading down 0.3% after having dropped as much as 0.7% early, taking cues from weak world markets.
Foreign funds have bought a net $1.4 billion worth of shares in June after dumping around $2 billion in May. The flows have a large impact on the rupee’s fortunes and are watched by investors. Foreigners are net buyers of $6 billion in 2010.
The index of the dollar against six major currencies was flat. The dollar and the yen were broadly steady on Wednesday while the euro and high-yielders were on the defensive as a recent risk rally appeared to have run its course and the euphoria from China’s new yuan policy waned.
One-month offshore non-deliverable forward contracts were quoted at Rs46.33, weaker than the onshore spot rate.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX were at Rs46.2275 and Rs46.23 respectively, with the total traded volume on the two exchanges at about $630 million.