Rupee crawls higher on capital inflows

The rupee nudged higher on Friday as the prospect for capital inflows got a boost from stronger US economic data and indications for a Greece bailout.

At 10:46 a.m. (0516 GMT), the rupee was 49.21/22 to the dollar, compared with the previous close of 49.29/30.

"Overall, we can expect the rupee to move towards 49 as inflows are likely to stay strong and the global mood is positive," said Naveen Raghuvanshi, associate vice-president of foreign exchange trading at Development Credit Bank.

He expects resistance for the currency around 48.88.

The rupee has strengthened 7.7% so far in 2012 on the back of nearly $8 billion invested by foreign funds in Indian stocks and debt. It had dived around 16 percent in 2011 and touched a record low of 54.30 on December 15.

The main stock index was up 1.2%, taking gains since the end of 2011 to almost 19%.

Higher global oil prices initially weighed on the rupee and Raghuvanshi said demand for dollars would go up if prices stayed high. India imports about 80 percent of the oil it consumes and the refiners are the biggest buyers of dollars.

Brent crude was above USD 120 a barrel on Friday, rising for a fifth day, on supply worries from Iran.

One-month offshore non-deliverable forward contracts were at 49.57.

In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were all around 49.31, on total volume of USD 869 million.