The Indian rupee strengthened to its strongest level in a week and half on Wednesday as continued foreign fund inflows into the domestic share and debt markets aided while gains in other Asian units also helped. Traders expect the rupee to remain wedged between the 59.60 and 60.50 levels in the absence of any key triggers in the near-term. The next major event for financial markets in India is the central bank's monetary policy review on August 5.
Overseas buying of shares and debt continued, taking total investments across the two segments to $24.7 billion so far in 2014. "I believe 60.05 is going to be a crucial support for the USD/INR. It needs to be seen if this level can be broken, which can then take it to 59.77 or even 59.55," said Deepak Agarwal, a foreign exchange trder with First Rand Bank.
"State-run banks are there at all levels to buy dollars, so don't expect very sharp gains. The next major event for the market now is only the policy review," he added. The partially convertible rupee closed at 60.0925/1025 per dollar compared with 60.24/25 on Tuesday. The unit hit 60.0550 during the session, its strongest since July 14. In the offshore non-deliverable forwards, the one-month contract was at 60.26 while the three-month was at 61.75.
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