Mumbai: The rupee rose to the highest this week on optimism that economic growth, which is the fastest among major economies after China, will keep drawing overseas investment. The currency traded near the strongest in almost a decade after finance minister Palaniappan Chidambaram said on Wednesday the expansion will be “about” 9% this year, near the quickest since 1989 in the 12 months ended March.
Purchases of Indian shares by funds based abroad more than doubled this yearfrom 2006.
“The short-term outlook is quite positive for the rupee as the underlying sentiment in the stock market remains bullish,” said V. Rajagopal, chief currency trader at Kotak Mahindra Bank Ltd in Mumbai. “We could see further rupee gains in the coming weeks.”
The rupee closed at 39.3025 per dollar from 39.305 on Wednesday, according to data compiled by Bloomberg. Its 12.7% advance this year is the second best performance by an Asian currency after the Philippine peso. The currency may advance to 39.10 in the coming weeks, Rajagopal said. The median forecast of 24 economists in a Bloomberg survey predicts the rupee will reach 39.21 by the year-end and 39 by the end of March.
The Bombay Stock Exchange’s benchmark index, the Sensex, has advanced 4.6% this week.