Mumbai: The Indian rupee strengthened on Monday as the dollar dropped overseas and traders watched the stock market for cues on fund flows.
At 10:22am, the partially convertible rupee was Rs48.61/62 per dollar, 0.3% above Friday’s close of Rs48.78/80.
“The rupee opened stronger to adjust with a rise in the stock markets,” said a senior dealer at a private bank. He said demand for dollars was limited because of a holiday in the United States.
The dealer forecast the rupee would trade in a Rs48.50 to Rs48.70 range, with a possible move towards Rs48.40.
US markets are shut on Monday for the Martin Luther King Jr Day holiday.
One-month offshore non-deliverable forward contracts were at Rs48.65/75, weaker than the onshore spot rate.
Asian stocks pushed higher and the dollar lost ground as investors looked for US President-elect Barack Obama to quickly roll out hefty economic stimulus spending and a revived plan to buy bad bank assets.
Dealers said the broad drop in the Japanese yen against the majors raised hopes of easing of risk aversion among investors, which could be positive for the rupee.
Foreign funds have withdrawn about $410 million from local equities this year, after pulling out more than $13 billion in 2008, but a rise in stock prices could turn the tide.