India rupee gains for 2nd day on corporate dlr inflows
* Rupee ends at 62.50/51 per dlr vs pvs close of 62.87/88
* Dlr flows from cos, custodian banks aids rupee gains
* INR seen gaining towards 62/dlr later this week-traders
By Swati Bhat
MUMBAI, Nov 25 (Reuters) - The Indian rupee rose for a second consecutive session on Monday, boosted by dollar selling by corporates and custodian banks, although month-end dollar demand from oil firms could limit a sharp rally in coming days.
Gains in the rupee tracked a rally in Indian shares as a drop in global crude prices after Iran clinched a nuclear deal with world powers sparked hopes of reduced inflationary pressures and a narrower current account deficit at home.
The rally in shares comes as a bit of a reprieve for currency markets as well after worries foreign institutional investors (FIIs) were curbing their buying of stocks.
FIIs were sellers of Indian stock futures for a fourth consecutive day on Friday, totalling 10.2 billion rupees ($163 million), as per regulatory and exchange data, while they sold cash shares on Thursday, snapping a 32-day buying streak. They were buyers of $2.65 million on Friday.
"We could see the unit once again gain towards 62 levels this week but oil demand will limit sharp gains," said Hari Chandramgethen, head of foreign exchange trading at South Indian Bank.
"Foreign fund inflows should continue to help. The Iran deal should also aid as crude will remain softer," he added.
The partially convertible rupee closed at 62.50/51 per dollar compared to 62.87/88 on Friday. The unit moved in a 62.44 to 62.70 range during the session.
Three traders said dollar inflows included those tied to Mylan Inc's purchase of a unit of Strides Arcolab Ltd. . The deal was valued at around $1.6 billion when announced in February.
However, expected dollar purchases from oil companies are expected to curb rupee gains. Meanwhile, the Reserve Bank of India said late on Friday it would end a concessional swap rate offered to banks raising certain types of funds abroad at the end of November, although loans in progress would be extended by one month.
J.P.Morgan estimated that state-run oil companies were sourcing 60 percent of their dollar demand since Oct. 18 in markets, and not from a special window provided by the central bank, according to a report on Friday.
In the offshore non-deliverable forwards, the one-month contract was at 62.93 while the three-month was at 64.02.
FACTORS TO WATCH * Yen drops to 6-month low vs dlr; 4-yr low vs euro * Iran deal pulls oil lower; cheers shares * Foreign institutional investor flows * For data on currency futures
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