Rupee may trade mixed on dollar demand …

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The Indian Rupee snapped four day rally and depreciated around 0.4 percent in yesterday’s trading session. The currency depreciated and retreated from eleven month high level on the back of dollar demand from oil importers and its companies. Further, intervention of Reserve Bank of India (RBI) for buying dollars to increase its reserves exerted downside pressure on the currency.

However, sharp downside in the currency was prevented due to sustained inflow of dollars into equities which led to upside in the domestic market sentiments. Selling of dollars by corporate companies and exporters cushioned downside movement in the Indian Rupee.

The Indian Rupee touched an intra-day low of 58.81 and closed at 58.58-level on Tuesday. For the month of May 2014, FII inflows totaled at Rs.14537.80 crores ($2444.04 million) as on 20th May 2014. Year to date basis, net capital inflows stood at Rs.46335.80 crores ($7689.0 million) as on 20th May 2014.

Expect Indian Rupee to trade on a mixed note on the back of dollar demand from oil importers and its companies will exert downside pressure on the currency. Additionally, intervention by RBI in buying dollars will act as a negative factor.

While on the other hand, victory for BJP with a majority in general election results will lead to formation of new government in next week which will support an upside in the currency.

Selling of dollars by exporters and corporate companies coupled with sustained inflow of foreign funds will act as a positive factor.

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