Mumbai: The rupee was flat on Monday, 14 January, as the Reserve Bank of India bought dollars to mop up some of the foreign money flowing into the market for Reliance Power’s initial public offering this week, dealers said.
At 9:45am, the partially convertible rupee was at 39.29/30 per dollar, unchanged from the previous close and hovering near a decade-high of 39.16 hit in November.
“The central bank was in early, setting the tone for the day, which is frustrating for the market,” said a dealer with a private bank.
Reliance Power is set to raise up to $3 billion in a share sale that opens on Tuesday, which would be India’s biggest-ever IPO. Dealers expect a net of about $1 billion to flow in from foreign funds, which should give the rupee a boost.
Suspected central bank intervention blocked attempts to test beyond 39.20 last week, and dealers said the central bank has bought around $3 billion so far this year capping the currency.
Asian currencies mostly firmed versus a weak dollar on Monday as the Chinese yuan hit a new high, but their gains were capped by concerns about weakness in the U.S. economy.
Indian shares opened stronger on Monday, on expectations of strong corporate earnings, which may boost the rupee although big gains were unlikely, dealers said.
“It’s most likely going to be a quiet day again, there’s really no reason for the rupee to break out of the 39.27-39.31 range for the moment,” said a dealer with a foreign bank.