BackRupee hits 7-month high as banks sell dollars
The rupee touched a high of 60.79 per dollar, and a low of 61.34, in the intra-day trade
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The rupee rose to end at a seven-month high against the US dollar on Monday on consistent dollar sales by foreign banks, likely on behalf of foreign institutional investors (FIIs) buying shares in the local stock market.
The rupee ended at 60.8425, the highest since 6 August 2013 and up 0.4% from the previous close. It had opened at 61.26 per dollar against Friday’s close of 61.09 and touched an intra-day low of 61.34, but recovered to rise to a high of 60.79. The Indian currency has now risen 2% in the last one week.
The rally in the local stock markest on expectations of a stable and business-friendly government post general election in May has also prompted dollar sales in the foreign exchange market, dealers said.
“There are huge custodial inflows which are partly the reason for rupee’s appreciation. The other part of course is positive stock market sentiment which has prompted dollar sales here. Importers are waiting on the sidelines to look for better levels while exporters are coming in to sell fearing that the rupee will strengthen further," said Mohan Shenoi, treasurer at Kotak Mahindra Bank Ltd.
India will elect a new Parliament in a nine-phase election starting from 7 April, the results for which will be declared on 16 May.
The main opposition Bhartiya Janata Party (BJP) led National Democratic Alliance (NDA) is widely seen as the front runner to replace the ruling Congress led United Progressive Alliance (UPA).
The BSE’s benchmark index, Sensex, ended at 21,934.83 points, up 0.07%, after touching an all-time high of 22,023.98 points.
So far this year, the rupee has risen 1.57% as foreign institutional investors have bought local equities worth $1.24 billion in the Indian market, fuelling the rupee’s rise.
On Monday, the yield on India’s 10-year benchmark bond ended at 8.78%, compared with its Friday’s close of 8.813%.
The dollar index, which measures the US currency’s strength against major currencies, stood at 79.777, up 0.07% from the previous close of 79.719.
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