Indian rupee stuck in narrow range against US dollar as large traders shy away

Indian rupee opened higher around 62.40/42 levels on spot against the US dollar, on the back of recovery in the Asian currencies and EM bloc.

However, the pair was then caught within a narrow range of 62.36 and 62.48 on spot, as large traders shied away ahead of European Central Bank meeting tonight.

Demand for US Dollar for a couple of mid-sized corporates was visible, for hedges for March-April months.

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Custodian flows trickling in did not allow for any rally in US Dollar to take hold. Dollar/Rupee closed around 62.36/37 on spot.

Economic data was negative, as German factory orders were weaker than expected for the month December as they contracted by 0.5% m/m. Indian Rupee is expected to trade within a tight range of 62.00/62.10 and 62.50/60 range over Friday.

Traders will keep a close eye on the US Job numbers to be released tomorrow evening.

By Anindya Banerjee, currency analyst, Kotak Securities