The Indian rupee rose on Tuesday tracking stronger domestic shares after foreign investors made their biggest single-day purchase of local stocks in nearly three weeks, while the absence of any central bank intervention also helped. The Reserve Bank of India also did not buy dollars on Tuesday, after a recent string of interventions.
The central bank bought a net $14.51 billion in the forward market in May compared with net forward dollar sales of $6.09 billion in April, according to Reuters calculations based on data available on the RBI's website. However, the rupee is expected to continue to remain in a tight range ahead of the federal budget on July 10 with the geo-political situation in Iraq also being closely monitored.
"Overall rupee is in a range of 59.80 to 60.40, but one can expect the rupee to rise above 59.80 after the next critical trigger of budget 2014," said Hemal Doshi, a currency strategist at Geojit Comtrade Ltd. The partially convertible rupee closed at 60.07/08 per dollar compared with 60.17/18 on Monday. In the offshore non-deliverable forwards, the one-month contract was at 60.34/44, while the three-month was at 60.95/61.05.
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