Future gains in the rupee are likely to be capped because of demand for dollars from state-run loan companies and loan repayments by a large corporate group, according to media reports.
The rupee on Wednesday gained five paise to settle at 82.55 against the dollar amid persistent inflows from foreign portfolio investors (FPIs) and global weakness in the greenback.
Analysts said the rupee is likely to trade rangebound in the immediate term, and traders are watching out for the monetary policy announcement from the Reserve Bank of India on Thursday.
A Reuters report quoting a trader said loan repayment by a large conglomerate (likely to be the Adani group) and cash dollar demand related to oil and gold are among the reasons that could cap the rupee’s gain.
The rupee on Wednesday opened stronger at 82.56 to the dollar compared with the previous close of 82.60 as DXY — the dollar index which gauges the greenback’s strength against a basket of six currencies — remained soft. The dollar has come under pressure after US Senate passed a bipartisan legislation that lifted the government’s debt ceiling.
On Monday, the Adani group said it has repaid $2.65 billion to complete a prepayment programme. Adani is set to raise Rs 21,000 crore via a qualified institutional placement (QIP) which could see strong FPI participation, boosting inflows and the rupee.