By Sam Nagarajan/Bloomberg
New Delhi: The rupee advanced for a third month on speculation that growth in Asia’s fourth-biggest economy will attract funds, undermining the central bank’s efforts to curb the advance.
Government data on Thursday, 31 May 2007, showed GDP in 2006-07 grew 9.4%, the fastest since 1989. “The bias is for a stronger rupee in the long term,” said V. Kumar, chief currency trader at State Bank of Travancore in Mumbai. “Capital flows are likely to get heavier as we see sustained growth.”
The rupee rose 1.3% this month to 40.62 against the dollar at 5pm in Mumbai, shows data compiled by Bloomberg. The currency may climb to 40.50 in coming days, said Kumar. The rupee trimmed this year’s gain to 9.1%, still the best performer in Asia. Inflation that accelerated to the highest in two years fuelled speculation RBI will tolerate a stronger rupee to lower the cost of imports.