The Indian rupee closed stronger against the dollar on Tuesday amid continued intervention by the Reserve Bank of India and easing foreign fund outflows from domestic bonds and equities.
The domestic currency strengthened by 2 paise to close at Rs 84.04 against the US dollar, according to Bloomberg data. The rupee closed at Rs 84.06 on Monday against the greenback.
"The Indian rupee was in a small range of 5.5 paise from Rs 84.0250 to Rs 84.08 as RBI was seen protecting Rs 84.08 since the last two days, after allowing a move down beyond Rs 84.00 on Friday," Anil Kumar Bhansali, head of Treasury and executive director at Finrex Treasury Advisors LLP, said.
The Hyundai Motor India IPO had a subdued offer, so the inflows, if any, would have been absorbed by the buying from FPIs and oil companies, he added.
Foreign investors sold Indian stocks for the 11th consecutive day due to the revival of Chinese stocks and concerns about valuation. In the last eleven sessions, FIIs have offloaded domestic stocks worth over Rs 73,100 crore, according to the provisional data from NSE. During the same period, domestic investors mopped up stocks worth Rs 73,600 crore.
Following their addition to JPMorgan Chase & Co.'s emerging-market bond index, Indian sovereign bonds eligible for global debt inclusion experienced their first weekly outflow.
"The dollar index at 103.06 slipped from its highs as euro gained a bit of composure ahead of the policy-setting meeting by the ECB on Thursday, though it remained under pressure as the inflation came at a low in the Euro Zone," said Bhansali.
"The US currency which was in demand in recent weeks based on employment and inflation readings spurred bets on a slower rate cutting pace by FED in its November and December meetings. Speakers were more on cautionary mode for future rate cuts saying that the rate cuts should be gradual," he added.
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