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MUMBAI: The Indian rupee gained for the fourth straight week aided by positive local shares and robust dollar inflows, while the outlook remained bullish for the local unit.
The partially convertible rupee ended at 49.3050/3150 to the dollar, after touching 49.2975, its highest since Nov 8, and firmer than 50.09/10 at close on Wednesday.
The market was closed on Thursday for a local holiday.
“All the factors are looking positive for the rupee, in addition to RBI's strictures on forex operations,” said J. Moses Harding, head of the asset-liabilities committee at IndusInd Bank.
“The supply has been tremendous from foreign funds. 49.20 is the next immediate support for the dollar. If we break that, we will be staring at a low on 48.51,” he said.
RBI Governor Duvvuri Subbarao said on Tuesday that the curbs that the central bank has put in place to prevent speculation in the forex market may not be temporary in nature.
Indian shares rose for a sixth straight session to a 11-week high as foreign investors continued to buy local stocks on indication of a policy shift towards reviving growth, with an increase in global risk appetite also aiding sentiment.
Foreign institutional investors have bought Indian shares worth $1.8 billion so far in January, and invested $3.4 billion in debt.
The Reserve Bank of India may intervene in the forward foreign exchange market, in addition to the spot market, to help manage liquidity in the banking system, a central bank source said on Friday.
The yen was on track to post its biggest daily gain in a month against the dollar, recouping most losses made earlier this week as hedge funds bought the currency, while the euro consolidated awaiting a breakthrough in Greek debt talks.
The market developments in Greece would provide directional cues and influence dollar inflows into India, traders said.
The European Union and IMF want Greece to push through more budget cuts and implement a series of long-agreed austerity reforms before they agree on a new bailout the country needs to avert bankruptcy, a report obtained by Reuters showed.
One-month offshore non-deliverable forward contracts were at 49.68, indicating some weakness in the short term in the onshore spot rate.
In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all ended around 49.6 on total volumes of $4.8 billion.
