Indian rupee weakened in a holiday thin trade against the US dollar on Monday as robust dollar demand by oil refiners for their settlement were offset by dollar selling by some state run banks and reversal in domestic shares after four consecutive session decline. Meanwhile, trading remained lackluster as all major world financial centers were closed for New Year holidays. At the end, Indian rupee was seen trading at 53.30/31 per dollar, 0.4% softer than Friday's close of 53.08/09, after tumbling to 53.34 in early trade.
While, Indian shares snapped four straight session fall and regained its strength after government allowed foreign investors to buy Indian stocks. Furthermore, RBI’s indication of liberalizing policy in coming month also boosted investors’ appetite as governor said that one could expect the reversal of monetary tightening from here on to address growth concerns. The benchmark index Sensex gained 0.4% to end at 15517.92.
Tuesday, Indian rupee is poised for a stronger opening against the US dollar at spot and would continue to trade higher as improvement in risk sentiment overseas have lifted demand for riskier currencies especially Asian and commodity linked currencies. Meanwhile strong support from local stocks would also help in lifting local currency’s demand.
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