The Indian rupee opened stronger against the US dollar Wednesday on steady foreign inflows. Global investors poured in Rs 10,291 crore in the cash market over the past week, marking this September as the best month in terms of inflows in the last six months.
The rupee appreciated by 9 paise to open at 83.58 against the US dollar, according to Bloomberg data. The local currency had closed at 83.67 against the greenback on Tuesday.
Stocks in Asia extended gains on Wednesday after Chinese authorities eased liquidity to boost economic growth. The gains were also fuelled by Wall Street posting a new record on further rate cut hopes after a disappointing consumer confidence report.
The rupee paused its winning streak last week, finding support at 83.50 but failing to hold above that level after appreciating nearly 0.5%, said Amit Pabari, managing director at CR Forex Advisors.
This reversal was largely due to RBI intervention and increased month-end dollar demand, he said. " On the flip side, steady inflows and a weaker dollar index may provide further support for the rupee."
The dollar index was down 0.22% at 100.25, while oil prices edged higher by 1.72% to $75.17, as oil steadied after its biggest advance in more than a week on the back of developments in the Middle East and the impact on demand of China's stimulus measures.
In the current setup, the USDINR pair is expected to find strong support around 83.50, with potential to rebound towards 83.75 to 83.80, according to Pabari. "This could offer another selling opportunity for those who missed out at similar levels earlier."
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