Rupee to rally

Rupee at 46.2400/2500 per dollar reflects the dollar selling taken up by the state banks prompted presumably by the RBI. RBI seems to be supporting the rupee and holding it from breaking 46.30 levels.

It is believed that the rupee might shuttle in the 46.20 to 46.30 range as there is not much reason for it to appreciate. The down sentiment continues due to the uncertain foreign funds inflow under the Congress led government, while the demand for the dollar by the importers still seen.

The Congress led government might find the going tough with their communist allies not backing their reform proposals to raise FDI inflows for investing in the infrastructure building activity.

The software companies who are guessing which direction the rupee will move are seeking RBIs help to hedge their dollar earnings to secure their inflows.

The dollar visa vis the Euro is currently in 1.2170 levels sees 1.2200 as a strong level to hold on to. The dollar is seen gaining still riding the positive sentiment fed by Greenspan's statement. With the expectations of Bank of England hiking rates next week the sterling will see some weakening. The yen at 109.75 sees 110 as a strong level and is currently well backed by the Japanese data and might not break that level for a while.