The Indian rupee ended stronger on Wednesday as robust capital inflows offset dollar demand from local oil importers and negative equities, and the outlook for the currency remains positive. Dollar inflows into India are expected to stay strong and easing inflation is seen creating more room for the Reserve Bank of India to cut interest rates, traders said.
"Improvement in growth outlook for FY13 will provide support to rupee and hence we expect it to trade around 46 levels by December 2012," said Shubhada M. Rao, chief economist for YES Bank, in a note. The rupee ended 0.2 percent stronger at 49.22/23 to the dollar. It moved in a band of 49.1650-49.3050 intraday. The Indian unit has rebounded nearly 8 percent so far in 2012 after last year's 16 percent slide. It touched a record low of 54.30 versus the dollar on December 15.
One-month offshore non-deliverable forward contracts were at 49.64. In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange ended at 49.2825, the MCX-SX at 48.2925 and the United Stock Exchange at 49.2900, on a total volume of $3.9 billion.
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