After resuming strong, the rupee rallied sharply to near 20-month high of 43.4150/4250 against US dollar in late morning deals, following sharp rise in forward dollar premia.
In active trade at the Interbank Foreign Exchange (forex) market, the Indian unit opened higher at Rs 43.51/52 a dollar from Friday’s close of Rs 43.57/58 per dollar and improved further to Rs 43.4150/4250 a dollar in late morning deals, up by a whopping 15.50 paise.Previously, the rupee had closed at 43.4150/4225 on 1 August, 2005.
A fresh slight cash crunch in the system compelled traders to sell dollars to generate funds, forex dealers said.
Sustained Foreign Institutional Investors (FIIs) inflows in equity markets also gave support to the currency.The rupee sentiment was so strong that rising global crude oil prices near USD 63 a barrel could not able to stem the surge in domestic unit.
Earlier,the rupee rose on speculation investors abroad will increase purchases of stocks.“Confidence of overseas investors on India has not withered by the recent volatility because of strong fundamentals,” said Parthasarathi Mukherjee, treasurer of UTI Bank in Mumbai. “That’s why flows continue to remain strong.”
The rupee rose 0.2% to 43.50 to the dollar as of 9:15 am in Mumbai, according to data compiled by Bloomberg. It may advance to 43.25 by the end of this week Mukherjee said.
Investors abroad bought $1.3 billion (Rs5,652 crore) more of Indian stocks than they sold this year through 22 March, according to the Securities & Exchange Board of India. They bought $8 billion of equities in 2006 and a record $10.7 billion in 2005.
The Bombay Stock Exchange’s benchmark Sensitive Index jumped 6.9% last week, the most in 11 months.The country expects its economy to grow 9.2% in the year ending 31 March. It is aiming for 10% growth in the next two to three years.