July 28, 2014 / 5:08 AM / 5 years ago

Rupee inches lower, expected to remain range-bound

MUMBAI (Reuters) - The rupee closed marginally weaker on Monday, marking another sluggish session as dollar demand from importers to meet month-end commitments was offset by greenback sales from custodian banks.

A private money trader counts rupee currency notes at a shop in Mumbai August 1, 2013. REUTERS/Vivek Prakash/Files

The Reserve Bank of India is also stepping-in to buy dollars when the rupee strengthens, further capping gains. Data late on Friday showed India’s foreign exchange reserves rose to $317.85 billion as of July 18, the highest since October 2011.

Traders expect the rupee to remain in a narrow range, unless global events flare up. This week analysts will look for U.S.-focused action, including the two-day Federal Reserve meeting ending on Wednesday and non-farm payrolls figures on Friday.

“We expect the pair to remain in a very narrow range for the near term as all the fund flows are getting absorbed easily in the market,” said Unnati Parekh, head of currency derivatives at KanjiForex, a forex brokerage in Mumbai.

She predicted a range of 60.05 to 60.35 for the week, barring major international shocks.

The partially convertible rupee closed at 60.1250/1350 per dollar, compared with 60.1025/1125 on Friday.

The local currency market will remain closed on Tuesday on account of a national holiday.

The rupee has remained supported as foreign portfolio investors have invested $5.18 billion in local shares and debt so far in July.

The 50-share Nifty fell 0.5 percent on Monday, as profit-taking hit shares of blue-chips such as ICICI Bank Ltd (ICBK.NS) for a second consecutive session after the record highs of last week.

In the offshore non-deliverable forwards PNDF, the one-month was at 60.31, while the three-month was at 60.78.

Editing by Prateek Chatterjee

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