The Indian rupee opened stronger on Thursday.
The local currency strengthened by 10 paise to open at Rs 86.85 against the greenback, according to Bloomberg. It had closed at Rs 86.95 on Wednesday.
India’s economy is expected to demonstrate a strong momentum in the second half of the year buoyed by resilient domestic demand and strategic policy interventions, according to the latest RBI Bulletin.
"Given these developments, the Dollar-Rupee pair is expected to trade within a range of 86.60 to 87.20. The 87.20 level is emerging as a strong resistance, while 86.50 is acting as a critical support zone," said Amit Pabari, managing director of CR Forex Advisors.
A breach below 86.50 could open up path for 85.80 to 86.00 levels, he added.
According to Pabari, the economic indicators are pointing towards a steady recovery in the second half of the year as the urban demand is set for a revival, supported by easing inflation and increased disposable incomes, due to significant income tax relief announced in the Budget.
Additionally, the Budget’s focus on agriculture, MSMEs, investment, and exports is expected to fuel medium-term economic growth making Indian assets more attractive. Additionally, robust kharif output, improved rabi sowing, and a seasonal correction in vegetable prices are expected to ease food inflation. Meanwhile, the real effective exchange rate depreciated by 2.2%, improving India’s export competitiveness on the global stage.
"Indian rupee is expected to move in a range of 86.70 to 87.10 as RBI protected it yesterday at 86.98 levels. FPIs continued to be sellers of equity yesterday by about Rs 2,000 crore. They have sold more than Rs 1.00 lakh crore in the last 1.5 months," said Anil Kumar Bhansali, head of treasury and executive director of Finrex Treasury Advisors LLP.
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