Rupee gains strength; further uptrend unlikely on month end dollar demand

Indian rupee after making somber start, recouped most of its losses, and was trading strong against the dollar on backdrop of negative local equities on Tuesday. However further uptrend of the pair is unlikely on account of caution ahead of outcome of US Federal Reserve's policy meet on late Wednesday and a clutch of US economic data in the week ahead. Besides, the currency may also lose some of its strength going further in the day on account of some month-end dollar demand from banks and oil importers, which would offset gains from corporate and foreign inflows. On the global front, euro was trading at multi-week highs against the yen early on Tuesday and held firm against the dollar following a surprisingly strong performance overnight as expectations for additional stimulus from the European Central Bank (ECB) waned.

The partially convertible currency is currently trading at 60.54, stronger by 10 paise from its previous close of 60.64 on Monday. The currency touched a high and low of 60.63 and 60.51 respectively. The Reserve Bank of India’s (RBI) reference rate for the dollar stood at 60.50 and for Euro stood at 83.62 on April 28, 2014. While, the RBI’s reference rate for the Yen stood at 59.17, the reference rate for the Great Britain Pound (GBP) stood at 101.6892. The reference rates are based on 12 noon rates of a few select banks in Mumbai.