The rupee, which has not been making any moves in either way has, gained 28 paise to close at a two-month high of 94.94 against the dollar Tuesday, buoyed by the more than expected economic growth, controlled fiscal slippages and portfolio-related inflows. The above 95-close also came in a day after the central bank closed the forex swap window for NRI deposits.
Forex traders said the latest MSCI-rejig and the resultant inflows are offering temporary succor to the rupee, which many analysts believe more pressure as the main dollar inflow window is closed. They also said Tuesday’s gain was also led by RBI’s intervention bolstered by the record forex reserves, which crossed $729.4 billion as of last week.
Earlier in the day, the rupee gained as much as 0.4% to 94.7988 as the Reserve Bank was seen in the offshore and onshore markets right from the start. This was clear as most other EM peers were under pressure today amid renewed US-Iran hostilities and a fresh climb in oil prices.
Dilip Parmar, senior research analyst at HDFC Securities told TNIE that the rupee is on a winning streak, locking in its third straight day of gains and outperforming its Asian peers, thanks to a stellar domestic growth numbers even after geopolitical tension simmering, and the central bank stepping in with dollar supplies.
He expects the spot rupee to face strong resistance at 95.30 and getting firm support around 94.50.
The currency was also supported by firmer-than-expected growth data, traders said. The numbers, released after currency trading hours Monday, showed GDP grew 7.8% on-year in the June quarter, beating the 7.3% median estimate and RBI’s 7% forecast.
“The manner of the RBI’s sales is their way of telling the market to unwind dollar long positions,” said Anil Kumar Bhansali of Finrex Treasury Advisors. “Stop-losses were triggered at 94.90 and the next key level is 94.75,” he said.