The Indian rupee weakened slightly on Thursday, snapping a three-day rising streak, as the dollar rallied broadly after minutes from the Federal Reserve July meeting suggested potentially earlier-than-expected rate hikes. However sentiment remains broadly supported on strong foreign buying in Indian markets, especially in debt. Foreign banks bought debt worth $2.44 billion on Wednesday, their highest since at least August 2009, clearing house data showed. Foreign funds have purchased $26.4 billion in debt and equities combined so far in 2014.
"Portfolio flows into stocks are expected to continue going ahead this year but heavy flows will prompt central bank buying. We should see the currency stabilise for now," said Param Sarma, director and chief executive officer at NSP Forex. The partially convertible rupee closed at 60.67/68 per dollar compared with 60.61/62 in the previous session.
"Despite sentiment being positive on India, there is very strong resistance for the rupee at 60 levels. Very near-term the rupee may hold in a 60.50 to 61.00 range and between 60 and 61.80 in the medium term," NSP's Sarma said. In the offshore non-deliverable forwards, the one-month contract was at 61, while the three-month was at 61.60.
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