By Sethuraman N R
BENGALURU (Reuters) – The Indian rupee was little changed on Friday, but ended the month of June with its highest gains since January, on the back of strong foreign fund inflows into equity markets.
The rupee ended at 82.0375 per dollar, compared to its close of 82.0550 in the previous session. On the month, the rupee rose 0.77%, highest since a 1.19% appreciation in January.
Strong macroeconomic fundamentals like higher growth, cooling inflation, strong earnings have attracted over $3.5 billion of inflows into the stock markets, driving the Sensex and Nifty 50 indexes to record highs.
The domestic currency has thus also performed better than some of its Asian peers in June.
The offshore yuan is down about 2% this month, the Thai baht has lost 1.9%, and the Indonesian rupiah is little changed.
The rupee has been pretty stable due to the inflows and quarter-end dollar sales by exporters, said Arnob Biswas, head FX research at SMC Global Securities.
Meanwhile, 1-year implied yield USD/INR forward premiums plunged to 1.68%, their lowest since Dec. 2022, tracking higher U.S. yields.
Indian importers should hedge their near-term foreign currency payments on expectations that the U.S. dollar will rally in the next quarter on the back of more Federal Reserve rate hikes, several analysts said.
Recent U.S. economic data and hawkish signals from Fed chairman boosted expectations that central bank will opt for more rate hikes.
The dollar index hovered near more than 2-week highs hit in the previous session.
“Barring a data surprise, the only threat to the strong dollar story comes from quarter-end rebalancing flows – which could generate some dollar selling at key fixings,” ING analysts said in a note.
(Reporting by Sethuraman NR in Bengaluru; Editing by Varun H K)
