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India Rupee to remain higher on domestic economic cues, weak dollar

From the intra-day perspective, we expect rupee to appreciate due to proposed auction of Rs 5,385 crore (about $1 billion) of State Government Securities today (October 23,2012) by the Reserve Bank of India on behalf of eight states in the country. This is expected to attract inflows. Additionally, mixed global market sentiments along with weakness in the DX are expected to support appreciation in the currency.

October 23, 2012 12:27

US Dollar Index swung between gains and losses and ended 0.1 percent higher due to rise in the risk aversion amongst the market participants and thereby increase in the demand for the low yielding currency that is US Dollar Index (DX).

US equities ended on a flat note as worries of global growth has seen hitting the corporate sales amidst better earnings. Gains were witnessed Technology shares which kept led the markets to end on a flat note. The currency touched high of 79.76 and closed at 79.74 levels on Monday.

Dollar/INR

The Indian Rupee appreciated by 0.7 percent in the yesterday’s trading session. The currency appreciated taking cues from rise in risk appetite in the global markets in the later part of the trade along with weakness in the DX. Additionally, upbeat domestic market sentiments also supported an upside in the currency.

However, sharp upside in the currency was capped as result of dollar demand from oil importers. The currency touched a high of 53.435 in yesterday’s trade and closed at 53.74 on Monday.

For the current month FII inflows totaled at Rs. 11,247.40 crores till 22nd October 2012. While year to date basis, net capital inflows stood at Rs. 93,578.20 crores till 22nd October 2012.

Outlook

From the intra-day perspective, we expect rupee to appreciate due to proposed auction of Rs 5,385 crore (about $1 billion) of State Government Securities today (October 23,2012) by the Reserve Bank of India on behalf of eight states in the country. This is expected to attract inflows. Additionally, mixed global market sentiments along with weakness in the DX are expected to support appreciation in the currency.

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