Mumbai: The Indian rupee strengthened on Tuesday after dropping for two consecutive sessions as a bounce in Asian stocks raised expectations of capital inflows into the domestic stock market.
At 9:40am (0410 GMT), the partially convertible rupee was at 48.79/80 per dollar, 0.6% stronger than its close of 49.08/09 on Monday, when the unit dropped as low as 49.47, its weakest since 15 May.
“The market would look to sell dollars around 48.95 and we could also see some dollar selling by exporters with the overall mood better in equities and the G7,” said Madhusudan Somani, head of foreign exchange trading at Yes Bank.
“The unit is likely to trade in a 48.70-48.95 range today.”
Asian stocks bounced on Tuesday as a rally in US financial shares helped Japan break a 10-session losing streak, while also reversing a little of the recent safe-haven rush into the yen.
Dealers said they would also be closely monitoring the dollar’s moves versus major currencies for direction. The dollar index, a gauge of the US unit’s performance versus majors, was down 0.1%.
Most Asian currencies were stronger versus the dollar.
Nifty India stock futures traded in Singapore were up 1.5% and the Morgan Stanley index of Asian stocks ex-Japan was 2.6% higher, both pointing to a firm start to the local market.
Though foreigners have sold almost $200 million worth of local shares on Thursday and Friday, they are still net buyers of $5.8 billion in 2009.
One-month offshore non-deliverable forward contracts were quoting at 48.88/98, weaker than the onshore spot rate, indicating a bearish near-term outlook.