Mumbai: The rupee gained on Monday on speculation exporters are taking advantage of the local currency’s decline last week to convert their foreign exchange earnings.
The rupee advanced for a second day as companies that sell goods abroad may have increased sales of dollars after the rupee fell to a two week- low on 19 December, said Roy Paul, assistant manager of treasury at Federal Bank. The rupee also rose as Asian stocks climbed for a second day, tempering concern global funds will cut their holdings of regional assets.
“The undertone is biased toward the rupee,” said Paul. “That is a concern for exporters, which is why they will prefer to sell dollars at every given opportunity.”
The rupee rose 0.3% to 39.4475 against the dollar as of the 5pm close in Mumbai.
The currency’s gain of about 12% this year is hurting exporters, commerce and industry minister Kamal Nath had said last week. The government last month reduced customs duties on manmade fibres and eased credit terms for leather and textile exporters. In October, it increased the amount of subsidies for loans and offered more generous tax breaks to exporters for a second time this year.
The rupee gained the most in three weeks on speculation overseas investors bought local equities helping the benchmark stock index rise the most in more than a month.
Overseas investors’ purchases of $16 billion (Rs63,200 crore) worth of stocks this year is more than double of the whole of 2006. They are probably buying shares of telecommunications companies after India added a record 8.33 million mobile phone subscribers in November, according to the industry regulator.
The country added 8.05 million mobile phone users in October, according to the Telecom Regulatory Authority of India. The previous highest monthly gain in subscribers was in August, when the nation added 8.31 million customers.
Meanwhile, India’s 10-year bond yields rose, on speculation the government’s increase in spending will provide banks with more cash to invest in debt.
The notes rose for a fifth day on optimism India’s record pace of economic growth will generate funds for the government to spend on improving ports and roads and to reduce poverty.
The yield on the benchmark 7.99% note due July 2017 was little changed at 7.86% as of the 5.30 pm close in Mumbai, according to the central bank’s trading system. The price rose 0.0275, or 2.75 paise per Rs100 face amount to 100.8275.
Anil Varma contributed to this story.