* Rupee ends at 53.76/77 per dlr vs 53.91/92 on Monday
* RBI rate cut seen supportive of economic growth
* Rupee seen range-bound; budget, balance of payments key
By Swati Bhat
MUMBAI, Jan 29 The Indian rupee strengthened to
its highest level in a week on Tuesday after the central bank
cut interest rates as well as banks' cash reserve ratio, with
dollar inflows tied to a sizeable share sale also aiding.
Traders said the central bank's decision to cut the repo
rate after nine months indicates a tilt in its policy to support
growth, which should help the rupee in the medium term.
Still, India's central bank struck a cautious note on
further easing as it waits to see how the government's upcoming
budget will aim to bring a bloated fiscal deficit under control.
"The policy was in line with expectations and I expect the
rupee to hold in a broad range of 52 to 55 over the next one to
two months. The budget would be the next big thing," said
Ashtosh Raina, head of foreign exchange trading at HDFC Bank.
"There were good dollar inflows seen today, which helped
offset the month-end dollar demand from oilers."
The partially convertible rupee closed at 53.76/77
per dollar, stronger than its Monday close of 53.91/92. The
rupee rose to a high of 53.5475 during the session, its
strongest since Jan. 22.
The rupee was also supported by dollar inflows that traders
attributed to a qualified institutional placement of up to $1
billion by Axis Bank Ltd.
Traders also saw intermittent dollar buying from oil firms,
the biggest buyers of the greenback in the domestic currency
market, whose demand tends to peak at the end of each month when
most are required to make import payments.
Standard Chartered Bank said in a note the fundamental
backdrop for the rupee remains mixed, with the currency likely
to be range-bound but volatile until there are discernible signs
of sustained improvement in the balance of payments.
In the offshore non-deliverable forwards, the
one-month contract was at 54.04, while the three-month was at
In the currency futures market, the most-traded near-month
dollar/rupee contracts on the National Stock Exchange, the
MCX-SX and the United Stock Exchange all closed at around 54.06
with total traded volume of $5.12 billion.
(Editing by Prateek Chatterjee)