Indian rupee had opened stronger, gaining beyond 61.00 handle, towards 60.90 levels on spot, against the US dollar. However, demand for the Greenback from importers as well as from a couple of large corporates pushed the currency back above 61.00 handle.
During the fag end of the day, when a weak German investor sentiment data and tensions in Crimea were pushing the Euro and Pound towards the day's low, rupee too joined the race, drifting towards 61.19/20 levels by the close of trading.
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Over the near term, we need to keep a close watch on the three key events: US FOMC, situation in Eurasia and Chinese financial system and economy. At a time when US central bank is cutting back on liquidity injections, impact from an escalation in geopolical tensions or financial tremors from China can suddenly become much more profound than what is anticipated. At the same time, as we head into the year, we can expect a more muted and ranged price action in the Dollar/Rupee trade. On spot, we expect to see a range of 60.60/80 and 61.50/70 levels on spot.
By Anindya Banerjee, analyst, Kotak Securities