Rupee may see a correction next week

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Mumbai, Sep 29: Backed by sustained fund inflows and absorbing big cues from rallying indices, Rupee stayed strong over the week, appreciating by nearly 0.75 per cent.

Rupee closed at 39.80/82 per Dollar on Friday and has appreciated by over 2.9 per cent in last one month.

Dealers attributed the currency growth to the more than expected rate cut mooted by US Federal Reserve and to the subsequent inflows to domestic equities.

According to SEBI data foreign funds have invested USD 3.76 billion in September. Sources said that the Rupee is likely to undergo a major correction in the coming week which may dip the unit to 40.20 per Dollar.

''Reserve Bank had intervened on the Forex market on Thursday and Friday. This shows they are concerned over the Rupee's constant appreciation and excess liquidity levels,'' Mashreq Treasury head Arnavaz Sukheshwala told the sources.

Banks had borrowed Rs 9,735 crore from RBI at the repo window on Friday mirroring the tightening liquidity in the system while in the single reverse repo LAF window, the Reserve Bank sucked out Rs 3,665 crore accepting all the five bids received.

Rupee started off the week at 39.83/85 per Dollar. Strongly observing the market movement, it touched a nine year peek of Rs 39.62 per Dollar on Thursday prompting the RBI to rampantly sell Rupee.

This apart, oil companies were also be seen buying Dollars in large scale during the week on account of their month end demand.

During the week Call rates stood volatile even touching a high of 8.5 -9.00 per cent on Friday and later settled at 5.00-5.50 per cent.


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