Rupee halts 3-day losing streak on flows; election outcome eyed
rupee ended higher on Thursday, halting a three-day losing streak, supported by dollar inflows related to the rebalancing of the MSCI equity indices.
The rupee ended at 83.3175 to the U.S. dollar, compared with the close of 83.3450 in the previous session. The local currency had dipped to 83.4375 earlier in the session, following a further rise in U.S. Treasury yields.
«The rupee was supported today, as there were some front-running of MSCI rebalancing flows, that are due tomorrow,» Anil Bhansali, head of treasury at Finrex Treasury Advisors said.
Analysts expect inflows of more than $2 billion later this week related to the rejig of the MSCI Global Standard Index, according to an estimate by Nuvama Alternative & Quantitative Research.
Currency traders, accustomed to regular Reserve Bank of India intervention, expect the central bank to curb volatility in the rupee.
The RBI will «enhance intervention toolkit» to curb undue rupee volatility against the U.S. dollar in fiscal 2025, it said in its annual report on Thursday, without specifying what new tools it would use.
Currency dealers expect the rupee to be range-bound ahead of the outcome of India's weeks-long general elections on June 4.
Analysts see a shock defeat for Prime Minister Narendra Modi as an unlikely event but fear a market correction — like one witnessed two decades ago — in the event of an «unclear» mandate.
Indian equities ended lower amid the election jitters. Foreign investors have sold about $2.3 billion of Indian equities in May on a net
