Mumbai: The rupee advanced to its strongest level in more than a month as a rally in Asian stocks boosted investor demand for emerging-market assets.
The local currency headed for a weekly gain after global funds bought $128.4 million (around Rs595 crore) more Indian equities than they sold in the first two days of the week, bringing inflows to a record $15.3 billion this year. The rupee also rose on speculation the nation’s refiners trimmed purchases of dollars after crude oil for January delivery declined to a five-week low yesterday in New York.
Investors are optimistic that fundamentals will improve sooner than later, and that is getting reflected in equities rising, said Naveen Raghuvanshi, a trader at Development Credit Bank Ltd in Mumbai. The rupee is poised to advance further.
The rupee rose 0.4% to 46.215 per dollar, according to data compiled by Bloomberg. That is the strongest level since 20 October. The currency has strengthened 4.1% this quarter, the best performance among Asia’s 10 most-active currencies excluding the yen.
Offshore contracts indicate bets the rupee will trade at 46.36 to the dollar in a month, compared with expectations of 46.40 on Tuesday. 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.
The benchmark Bombay Stock Exchange’s Sensex advanced 0.4% on Wednesday, bringing gains to 78% this year.