The Indian rupee strengthened on Monday, tracking emerging market currencies as the dollar weakened following weaker-than-expected US jobs data, although caution ahead of consumer inflation data later this week tempered some of the gains. The rupee also failed to get much of a lift from shares, which hit their latest record highs earlier in the session but ended flat as investors booked profits.
Traders are looking ahead at the consumer prices data due on Wednesday, amid rising expectation the Reserve Bank of India could opt for earlier-than-expected cuts in interest rates should inflation continue to ease. "Markets will watch out for the CPI data for immediate direction. Outlook for rupee broadly remains positive but global dollar strength will have some effects on the rupee," said Hari Chandramgethen, head of foreign exchange trading at South Indian Bank, predicting a range of 61.30 to 62.30 for the week.
The partially convertible rupee closed at 61.4950/5050 per dollar compared with 61.6425/6525 on Friday. The unit had hit an intra-day low of 61.6750 in the previous session, its lowest level since October 17. Traders will continue to monitor the dollar's moves as well as foreign fund flows. In the offshore non-deliverable forwards, the one-month contract was at 61.81, while the three-month was at 62.87.
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