The gains came in despite high crude oil prices and overall weak Asian currencies during the day. Strong Q1 GDP growth of 7.8% along with dollar sales by the Reserve Bank both in the offshore as well as domestic markets caused this rise, traders said.
“The strength reflects continued RBI dollar sales, both in the NDF and OTC (over the counter) market, along with flows from National Investment and Infrastructure Fund of nearly $ 2.2 billion on Tuesday,” said Anil Bhansali, head of treasury, Finrex Treasury Advisors.
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The rupee traded between 94.79 and 95.11 on Tuesday, and according to these levels, it has erased nearly all losses of this financial year. The rupee had closed at 94.83 in March.
The positive sentiment however is not expected to last very long, as dollar demand is likely to continue amid high oil prices, while global bond sentiments are negative. “The positive growth outlook is helping offset pressure from higher oil prices and keeping sentiment towards the rupee stable. Going ahead, crude, dollar movement and FII flows will remain key triggers. Rupee range can be seen between 94.70 and 95.40 in the near term,” said Jateen Trivedi, VP, research analyst, LKP Securities.
