The Indian rupee ended steady on Thursday after robust dollar supplies from exporters were matched by foreign fund outflows and corporate purchases, dealers said.
But traders said the rupee may start Friday on a firmer note, when the market will get a chance to react to news that Moody's Investors Service upgraded India's long-term foreign currency rating to an investment grade Baa3.
News of the ratings upgrade came just after the rupee had shut for trading on Thursday.
The rupee ended at 45.3925/4025 per dollar, barely changed from the previous close of 45.3975/4075.
"State-run banks, on behalf of the central bank, intervened sporadically on Thursday," said a dealer at a private bank. "There was some corporate dollar demand from a state-run power firm but inflows from exporters were good enough to offset it."
Analysts said Moody's upgrade was likely to lead to increased capital inflows and could possibly push the rupee up.
The ratings agency said a reduction in external vulnerability, rising foreign investment, and vibrant economic growth prompted its decision.
"This upgrade along with the new relaxed external commercial borrowing guidelines recently announced will encourage corporates to borrow more abroad," said A. Prasanna, analyst at ICICI Securities.
"Overall, this upgrade will lead to greater capital inflows and put upward pressure on the to the rupee."
Foreign fund investors, who pumped in a record $6.7 billion in 2003, were one of the main contributors to the rupee's 5.2 percent rise against the dollar last year.
But traders said the local currency's gains will be muted, with the central bank likely to curb a sharp appreciation to maintain the competitiveness of Indian exports.
Rupee premiums on the forward dollar eased on a bullish outlook for the Indian currency. The six-month forward ended at an annualised 0.57 percent, down from the previous close of 0.77 percent.
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