The rupee inched lower on Monday as a revival in seasonal rains moderated concerns that inflation may accelerate. Bloomberg reports that the deficit in the June-September monsoon has narrowed to 24 percent of the 50-year average since June 1. This is a large decrease compared with the 43 percent recorded on July 11, according to the weather department.
Consumer prices are at their smallest gain in data from the beginning of 2012, advancing 7.3 percent in June. However, the currency has remained supported, as foreign investors have pumped $5.18 billion into local shares and debt so far in July.
Vikas Babu, a foreign-exchange trader in Mumbai at state-run Andhra Bank said, "The narrowing of the shortfall in rains is a positive for the markets. Inflows are buffering month-end dollar demand from oil importers," according to Bloomberg.
Traders expect that the rupee will continue on its narrow range, saving global conflicts intensify. 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, reports Reuters.
Unnati Parekh, the head of currency derivatives at KanjiForex, a forex brokerage in Mumbai, expects a range between 60.05 to 60.35 for the week, assuming no major international shocks occur.
The partially convertible rupee closed at 60.1250/1350 per dollar, compared with 60.1025/1125 on Friday.
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