Mumbai: The Indian rupee pulled back from early lows on Friday, tracking a drop in the dollar index, and traders watched the stock market for direction on fund flows.
At 10:40am, the partially convertible rupee was at Rs49.25/26 per dollar, off an early low of Rs49.40 and little changed from Rs49.28/29 at close on Thursday when it rose to 49.2250 during trade, its strongest since 17 February.
“There is a lot of momentum in the stock market. Expectations are that foreigners would keep bringing in funds, which is helping the rupee,” a senior dealer with a foreign bank said.
“But a lot would depend on the election results, only then would markets get a clear direction,” he added.
The results of India’s month-long national elections, which are currently underway, are due on 16 May.
Indian shares were trading little changed after rallying about 50% from their 2009 low in early March.
Foreign funds have bought a net $1.5 billion of local shares in April, and pumped in a further $575 million in the first three days this week, data showed.
The inflow has helped the rupee rebound nearly 6% from its record low of 52.2 touched on 3 March.
The dollar index, a gauge of the US unit’s performance versus majors, was 0.1% lower after having risen more than 0.3% earlier.
One-month offshore non-deliverable forward contracts were quoting at Rs49.25/35, unchanged from the the onshore spot rate, indicating an optimistic outlook for the rupee.