The Indian rupee strengthened on Friday aided by local share gains on improved global risk appetite, but analysts expect the upside to be limited in the medium term as the pace of foreign fund inflows is seen slackening. Traders said the Reserve Bank of India's unexpected 75 basis points cut to 4.75 percent in cash reserve ratio, effective Saturday, less than a week before its mid-quarter policy review on March 15, was unlikely to have a big impact on the rupee.
The rupee closed at 49.84/85 to the dollar, stronger than its Wednesday's close of 50.28/29. The market was closed on Thursday for a local holiday. The currency posted its second straight week of losses, having shed 0.7 percent on the week. The one-month offshore non-deliverable forward contracts were at 50.30. In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all ended at around 50.1, on a total volume of $3.90 billion.
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