Mumbai: The Indian rupee edged higher in afternoon session on Thursday boosted by gains in local shares and the dollar’s broad weakness.
Traders, however, built long dollar positions expecting the rupee to weaken once outflows start after Coal India completes share allocation.
At 2:20pm, the partially convertible rupee was at Rs44.30/31 per dollar, stronger than its previous close of Rs44.35/36.
Dealers do not expect major intraday foreign fund inflows that could put downward pressure on the rupee, as the subscription for Coal India’s initial public offering closed on Wednesday for institutional investors.
State-run Coal India’s IPO to raise as much as $3.5 billion was nearly 12 times covered on Wednesday as big investors made a beeline to subscribe during the final hours for institutional orders.
Persistant dollar demand from oil importers was also preventing the rupee from rising further, traders said. Oil is India’s biggest import and refiners are the largest buyers of dollars in the domestic currency market.
Indian shares were up 1.9% taking cues from firm Asian markets.
State-run Power Grid Corp, Steel Authority of India and Indian Oil Corp are some of the companies that are planning large share sales in coming months, which could attract more foreign fund inflows.
The dollar index against six major currencies was also down 0.3%.
One-month offshore non-deliverable forward contracts were quoted at 44.60, weaker than the onshore spot rate.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange, MCX-SX and United Stock Exchange were all at 44.3650, with traded volume on the three exchanges at a low of $3.8 billion.