USDINR may trade in 53.90-54.30 range: Nirmal Bang

The Indian rupee strengthened to its highest level in over a week on Monday, boosted by dollar sales by custodian banks, positive sentiment ahead of the upcoming federal budget and heavy dollar selling in the non-deliverable forwards market.

Net inflows into the country's equity market have been a key determinant of the rupee's fortunes in recent years. Foreigners have so far this year bought $8.4 billion worth of local shares after purchasing $24.55 billion in 2012. However, continued dollar demand from oil refiners, the largest buyers of dollars in the domestic currency market, to meet month-end import commitments limited further gains in the rupee.

Rupee is expected to open weaker compared with its close of 53.86/87 on Monday on the back of a global risk-off following the gridlock in the Italy elections. Asian shares fell, taking their lead from overnight plunges in global equities. The pair is seen moving in a 53.90 to 54.30 range initially in the session with dollar demand from oil firms likely to limit gains.

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