MUMBAI (Reuters) - The rupee posted its best single-day gain in two weeks on Thursday, boosted by hopes of a package from the government and the Reserve Bank of India (RBI) over the weekend which would help bring in much needed dollar inflows to fund the current account gap.
“Wait till the end of the week,” Economic Affairs Secretary Arvind Mayaram told reporters in Mumbai when asked about further likely steps to prop up the rupee. “Finance minister will talk about this later,” he added.
Among the steps being considered are raising dollars via state-run banks or companies and easing overseas borrowing rules.
The RBI could also announce additional steps to follow its cash-draining measures announced last month.
Traders, however, were cautious of reacting too early, especially as repeated comments from policymakers earlier have led to no concrete outcome, preventing a much sharper rally.
“RBI’s earlier measures have not been sufficient to stop rupee’s fall. The news that finance minister is going to speak soon, especially after the rupee hit the latest record low, is raising hopes for more steps,” said Pramod Patil, assistant vice president, forex and money markets at United Overseas Bank.
“It is a bit difficult to predict rupee’s movement next week as on the one hand fundamentals point to further weakness and on the other, there is uncertainty on RBI’s next course of action. But it should broadly hold in a 60.50 to 61.50 range,” he added.
The partially convertible rupee closed at 60.88/89 per dollar compared with 61.30/31 on Wednesday. The pair moved in a wide band of 60.82 to 61.40 during the session.
The unit gained 0.7 percent on day, its best daily gain since July 24. On the week, the rupee gained 0.4 percent.
Traders said there was intermittent dollar selling by state-run banks, likely on behalf of the central bank to prevent a sharp fall in the rupee.
However, 61.40 levels are being seen as a strong support for the rupee in the near-term, with exporters expected to step in whenever the unit tries to breach past that level.
In the offshore non-deliverable forwards, the one-month contract was at 61.39 while the three-month was at 62.31.
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 61.14 with a total traded volume of $2.4 billion.
Editing by Anupama Dwivedi