MUMBAI: The Indian rupee, following last week’s rally, may not react much at the open on Monday to the decline in the Chinese yuan and other Asian currencies.
The 1-month non-deliverable forward indicated that the rupee will open little changed to the US dollar from 85.9725 in the previous session.
The Indian currency rallied significantly last week, rising 1.2% amid inflows, resulting in its best weekly performance in two years.
Foreign inflows into Indian equities exceeded $1 billion last week, a significant chunk of which took place on Thursday and Friday.
Friday’s data is preliminary. While the magnitude of the inflows is not exceptionally large in isolation, it represents a significant shift from prior weeks, a currency trader at a bank said.
Foreign investors took out nearly $3.5 billion from Indian equities between March 3 and 14, which followed a $4 billion withdrawal in February.
“There were probably other flows too last week and whether we have more of them will decide” if rupee manages to hold near the 86 level, the currency trader said.
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