By Jaspreet Kalra
MUMBAI (Reuters) – The Indian rupee’s searing climb over the last 10 days may have prompted bears to bail but traders and foreign exchange advisors doubt that the seasonally supportive factors have more room to run.
Intermittent inflows from foreign portfolio investors and the repatriation of corporate dollar-based earnings ahead of the fiscal year end on March 31 have helped the rupee climb to the top of the Asia FX pack this month.
On the day, the rupee was down 0.1% at 85.7250 per U.S. dollar, while Asian currencies were down between 0.1% and 0.3%.
While the rupee has risen more than 2% this month, market participants reckon it may not be enough to spur bullish wagers.
“The current move to me is more of a year-end phenomena and we are using this as an opportunity to build import hedges and rationalise export hedges,” said Samir Lodha, managing director at Mumbai-based FX advisory firm QuantArt Market Solutions.
Some analysts have also pointed out that the rally is also underestimating India’s vulnerability to reciprocal U.S. tariffs, expected to be announced on April 2.
It’s “slightly tricky to call a direction on (USD/INR) given the recent move but don’t think there will be much more downside from here,” a trader at a mid-sized private bank said.
To be sure, some strategists feel the rupee still has room to extend its gains.
“Having broken below 85.78, or its 100-day moving average, USD/INR could revisit the psychological level at 85,” Philip Wee, senior fx strategist at DBS Group Research, said in a note.
(Reporting by Jaspreet Kalra; Editing by Savio D’Souza)
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