The Indian rupee gained for the third straight session to close at its highest level in two months aided by strong foreign inflows.
The domestic currency today appreciated 28 paise over its previous trade to close at 70.005 against the greenback. It had strengthened below the 70-a-dollar mark intra-day for the first time since Jan. 8, 2019. The rupee gained 91 paise in the past three trading sessions.
That comes as foreign institutional investors remained net buyers in the equity market, putting in Rs 1,138 crore, according to provisional data available on the website of the National Stock Exchange. In comparison, the domestic counterparts sold Rs 925 crore worth of equities.
“The rupee strengthening is due to a couple of factors. First, there is a higher probability of (Prime Minister) Modi coming back to power. Second, earlier rupee positioning was not strong with most FIIs being short, and the last quarter of the fiscal historically tends to see better dollar inflows,” said Ananth Narayan, professor at SP Jain Institute of Management and Research. There will be a spurt in the domestic currency if Modi comes back to power, Narayan told BloombergQuint. “The bullishness will continue for a while but the broad balance on the external side of current account deficit is worrisome.”
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