Rupee gains the most in Asia as expansion seen spurring inflows

Rupee gains the most in Asia as expansion seen spurring inflows
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First Published: Tue, Nov 24 2009. 12 15 AM IST
Updated: Tue, Nov 24 2009. 12 15 AM IST
Mumbai: The rupee gained the most in more than a week on speculation economic growth prospects in the region will encourage overseas investors to increase holdings of the nation’s stocks.
Ownership of Indian equities by funds based abroad climbed to a record $15.3 billion (Rs71,145 crore) as of 20 November, data from the Securities and Exchange Board of India (Sebi) showed.
The benchmark Bombay Stock Exchange’s sensitive index rose to the highest in a month on Monday.
The dollar fell against most major currencies, while the price of gold rose to an all-time high.
The tide is swaying away from the dollar because of fundamental reasons and that is helping the rupee, said Jai Prakash Israni, a currency trader in Mumbai at state-owned Andhra Bank. There is no reason why the rupee will not rally in the near term.
The rupee gained 0.4% to 46.48 per dollar in Mumbai, according to data compiled by Bloomberg.
The rupee may advance to 46.25 this week, Israni said. The local currency has strengthened 3.6% this quarter, the best performance in Asia. Economic reports this week may show rising export orders in Taiwan and faster growth in the Philippines, according to Bloomberg surveys of economists.
Gold has advanced 34% this year as the Dollar Index, a gauge of the currency’s value against six major trading partners, fell 7.4%. The most accurate forecasters predict the greenback will extend its drop as the world’s lowest borrowing costs, rising unemployment and a record $4 trillion of government bond sales between 2009 and 2010 weigh on the dollar.
Offshore contracts indicate bets the rupee will trade at 46.49 to the dollar in a month, compared with expectations of 46.66 at the end of last week. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non-deliverable contracts are settled in dollars rather than the local currency.
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First Published: Tue, Nov 24 2009. 12 15 AM IST
More Topics: Rupee | Bombay Stock Exchange | BSE | Equities | India |