Rupee trades near March high on overseas fund buys

Rupee trades near March high on overseas fund buys
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First Published: Tue, Mar 17 2009. 09 53 PM IST

Small change: The rupee rose to 51.24 before ending at 51.43 on Tuesday. Ramesh Pathania / Mint
Small change: The rupee rose to 51.24 before ending at 51.43 on Tuesday. Ramesh Pathania / Mint
Updated: Tue, Mar 17 2009. 09 53 PM IST
Mumbai: The rupee traded near this month’s high on Tuesday as weekly share purchases by overseas investors exceeded sales for the first time since mid-February.
The currency gained as much as 0.3% earlier after the benchmark equity index, the Sensex, rallied almost 10% in the three trading sessions through Monday, fuelling optimism global funds will buy more local assets. The rupee also rose on bets foreign direct investment (FDI) will increase as policymakers step up efforts to revive economic growth.
Small change: The rupee rose to 51.24 before ending at 51.43 on Tuesday. Ramesh Pathania / Mint
“The rupee has benefited because the positive trend in equities is expected to help improve fund inflows,” said Ravindra Babu, a foreign exchange trader at state-owned Andhra Bank in Mumbai. “We’ve seen some FDI flows too.”
The currency closed at 51.43 per dollar at close, little changed from 51.40 on Monday, according to data compiled by Bloomberg. It rose to 51.24 earlier, the highest since 27 February.
The currency has rebounded 1.5% from a record low of 52.19 reached on 3 March.
Funds based abroad bought a net $26 million (Rs133 crore today) of Indian stocks last week, compared with net sales of $543 million in the previous five-day period, according to data released by the Securities and Exchange Board of India, the nation’s capital markets regulator.
Offshore contracts indicate traders bet the rupee will trade at 51.75 to the dollar in a month, compared with expectations for a rate of 51.58 on Monday.
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, Mar 17 2009. 09 53 PM IST
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