By Jaspreet Kalra
MUMBAI (Reuters) – The Indian rupee pared early gains after jumping to a more-than-two-month high in early trading, following exit poll projections that Indian Prime Minister Narendra Modi’s party and alliance will secure a third term with a sizeable mandate, boosting investor confidence.
The rupee was at 83.08 against the U.S. dollar as of 10:05 a.m. IST, up 0.5% from its close of 83.4625 in the previous session.
The currency touched an intraday high of 82.9575, its highest since March 19.
Broad-based interbank dollar sales lifted the rupee in early trades but “importers have barged in,” to buy dollars, hurdling the rupee’s gains, a foreign exchange salesperson at a private bank said.
“A big gap down move (on USD/INR) coupled with the anticipation of RBI intervention (to buy dollars) is keeping offers away.”
Weekend exit polls projected the alliance, led by Modi’s Bharatiya Janata Party (BJP), to increase its 303 seats in the 543-member lower house of Parliament.
But investors are likely to wait for the election results due on June 04 as exit polls in India have a patchy record, often getting the outcome wrong, analysts said.
“We expect risk assets to rally, India govt bond yields to grind lower, and INR to strengthen in the immediate aftermath, notwithstanding RBI’s likely hand in intervening to cap INR strength,” MUFG Bank said in a Monday note.
Benchmark Indian equity indices, the BSE Sensex and Nifty 50 jumped to record highs and were last quoted up about 2.5% each.
“Till final results are announced we may see appreciation in the rupee to about 82.80-90,” Apurva Swarup, vice president at Shinhan Bank India said.
The dollar index was little changed at 104.6 while Asian currencies were mixed. Dollar-rupee forward premiums edged lower with the 1-year implied yield down 1 basis point at 1.64%.
(Reporting by Jaspreet Kalra; Editing by Janane Venkatraman)
