Mumbai: The rupee inched higher on Monday on speculation the central bank may allow the currency to rise to fight off rising inflation, though gains may be checked as stocks are expected to weaken and capital inflows may slow.
At 9:14 a.m., the partially convertible rupee was trading at 39.860/870 per dollar, slightly stronger than Friday’s close of 39.895/905, its strongest since 28 February.
India’s benchmark share index opened lower on Monday, mirroring a slide in markets across Asia, which were heading for their worst quarterly performance in over five years. Stocks ended up 2% on Friday.
Inflows of overseas capital are a key driver of the rupee and have risen of late, ahead of the end of the fiscal year on 31 March. Foreigners bought $792 million in shares in the past five sessions to Thursday. But analysts say that with the start of the new fiscal year, those inflows are likely to slow down.