Rupee likely to trade in narrow range of 64.10 to 64.80 this week

The rupee is likely to move in a narrow range of 64.10-64.80 versus the US dollar this week on expectation of sustained foreign institutional investor (FII) inflows, but month-end demand for the US currency from oil importers will put some pressure on the local unit, say treasury heads at banks.

The rupee closed at 64.44 on Friday, 18 paise higher than Thursday's close of 64.62.

Surge in the rupee in the past few sessions was on account of FII inflows into equities and weak dollar in the overseas market.

"Rupee has been trading in a range and will continue to do so. With Sensex hitting life-time high, it gives a psychological comfort that (FII) flows are continuing and will continue."The currency is likely to trade between 64.25-64.75 this week," First Rand Bank's Head of Treasury Harihar Krishnamurthy said.

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On Friday, the Sensex crossed the 31,000-mark for the first time ever, ending at 31,028.21, up 278.18 points, or 0.90%.

Nifty too breached the 9,600-level, also in a first, before settling at a record high of 9,595.10.

"Globally, India is perceived as a high growth economy and so FIIs are flocking here. Rupee will continue to gain," said a senior treasury dealer with a state-run bank.

He sees the rupee rising to 64.10 this week, triggering some buying from oil companies and Reserve Bank of India (RBI) at that level, which will lead to depreciation of the domestic currency.

"Recent rise in the stock market is mainly on account of domestic institutional investors and it has not supported much to the rupee's gain. Higher demand for dollars towards the end of the month will put pressure on the rupee this week. It will trade in 64.40-64.80 range," said a treasury officer at a private-sector bank.

On Friday, overseas investors pumped in Rs 789.20 crore into equity markets but sold Rs 206.71 crore in the debt market.

In May itself, Foreign Portfolio Investors (FPIs) have invested Rs 24,775.99 crore on net basis, with Rs 9,006.88 crore in equities and Rs 15,769.11 crore in the debt market.

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