Traders said the market will continue to be driven by flows in the run-up to the results of the national elections due on May 16, as participants bet that the opposition Bharatiya Janta Party (BJP) and its allies will win a narrow majority in the 543-seat lower house of parliament.
Although the rupee has been helped by continued foreign inflows into equities, which helped the currency gain in each of the previous three sessions, overseas investors have turned sellers in index futures totalling Rs 243 crore ($40.4 million) over the five previous sessions until Friday.
The one-month implied volatility in the spot rupee > stood at 11.3%, not far from 12.2% hit on April 28, which was its highest since mid-November.
"There was good bidding from state-run banks and oil firms pulling the rupee off highs. 59.90 to 60.60 range will continue to hold with the market swinging mostly to the flows," said Hari Chandramgethen, head of foreign exchange trading at South Indian Bank.
The partially convertible rupee > closed at 60.21/22 per dollar compared to 60.16/17 on Friday. The currency rose to as high as 60 to the dollar, its highest since April 9.
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In the offshore non-deliverable forwards