Rupee rise likely to continue on reform hopes,capital inflows

“The rupee is showing appreciating bias. After the reform measures announced in the multi-brand retail and aviation space,now the market believes that the government will come up with more measures to prop up the economy,which in turn will support the rupee,” Geojit Comtrade Currency Strategist Hemal Doshi said.

If the rupee breaches 52.60-52.80 level,then it is likely to strengthen further,he added.

As part of reforms,the government opened gates for FDI in multi-brand retail and has also allowed foreign airlines to pick up stake in the domestic aviation sector.

The Centre has also increased the diesel price to reduce the subsidy bill,which improved the sentiment of the market with sound rally seen in the equity space.

On their rupee target this week,experts said “ample liquidity” after the announcement of stimulus by the US Fed and the European Central Bank also supported the domestic currency.

“Investors,who are in risk-off mode,are in a risk-on mode after the availability of ample liquidity in the global economic system following the third round of stimulus measures announced by the US Fed and the ECB.

“As a result,there are a lot of foreign capital inflows into the domestic market,which supports the rupee,” IDBI Bank treasury head NS Venkatesh said.

If the present level of positive sentiment is sustained in the market,it will help in strengthening the rupee further,Venkatesh said,adding it is likely to be in the range of 53.40-54 against the dollar.