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Rupee rises for 4th day as stocks rally

Rupee rises for 4th day as stocks rally
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First Published: Mon, Sep 07 2009. 05 29 PM IST
Updated: Mon, Sep 07 2009. 05 29 PM IST
Mumbai: The Indian rupee gained for a fourth straight session on Monday, with a rally in domestic shares fueling hopes for foreign portfolio inflows but dollar demand from oil refiners kept a lid on the rise.
The partially convertible rupee closed at Rs48.66/67 per dollar, half a percent stronger than Friday’s close of Rs48.90/91. Last week, the rupee had dropped to as low as Rs49.21, its weakest since 13 July.
“There was lot of short-covering in equities globally, and now that we have closed above 16,000 points on the Sensex, I think the bullish sentiment will continue,” said Madhusudan Somani, head of foreign exchange trading at Yes Bank.
He was referring to the BSE share index, which climbed 2.1% to its highest close in 15 months, helped by positive company announcements, firmer global markets and signs investor appetite for IPOs remain robust despite muted recent stock market debuts.
“Globally equities are looking set for a breakout. On the INR we’re still underperformed,” Somani said.
India’s foreign exchange reserves rose by more than $4 billion in the week to 28 August.
Somani said state-run banks bought dollars through the day. Oil is India’s biggest import and refiners are the largest buyers of dollars in the domestic currency market.
Foreign funds have bought a net $8.1 billion of local shares in 2009, after selling more than $13 billion last year.
“With the dollar weakening against the G7 currencies, I guess the USD/INR will continue to trade with an offered bias. The rupee is very much likely to go towards Rs48.5 in the near term,” Somani said. The dollar and the yen weakened on Monday, with the euro advancing while the Australian dollar hit its strongest level in a year as shares gained after a G20 pledge to keep economic stimulus packages in place.
The dollar index, a gauge of the US unit’s performance against six majors, was down 0.3%.
One-month offshore non-deliverable forward contracts for the rupee were at Rs48.67/77, almost unchanged from the onshore spot closing rate.
In the currency futures market, the most traded near-month contracts on the National Stock Exchange and MCX-SX closed at Rs48.7225 and Rs48.72 respectively, with the total traded volume on the two exchanges at a lower-than-average $1.4 billion.
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First Published: Mon, Sep 07 2009. 05 29 PM IST