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Rupee up for second month on cues of global buying

Rupee up for second month on cues of global buying
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First Published: Thu, Nov 01 2007. 12 07 AM IST
Updated: Thu, Nov 01 2007. 12 07 AM IST
New Delhi: Rupee advanced a second month as a stock market rally spurred global funds to buy more local shares.
The currency traded near the highest in nine-and-a-half years as the central bank left interest rates unchanged on Tuesday, reinforcing speculation the nation’s yield advantage over the US will widen, making Indian assets more attractive. Futures contracts show the US Federal Reserve will lower the benchmark rate by a quarter-percentage point on Wednesday. “A cut by the Fed... will only increase pressure on the rupee to appreciate even further,” said Vikas Babu, a currency trader at Andhra Bank in Mumbai.
The rupee rose 1.3% this month to 39.3275 against the dollar at 5 pm in Mumbai, according to data compiled by Bloomberg. It has gained more than 12% this year, making it the best performer among the 10 most-traded Asian currencies outside Japan.
The difference in yield between India’s two-year government bond and a similar-tenor US Treasury note widened to 3.85 percentage points from less than 2 percentage points in June, Bloomberg data show.
Stock purchases by the global funds rose to $8.1 billion in the month following the Fed’s 18 September rate-cut decision.
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First Published: Thu, Nov 01 2007. 12 07 AM IST
More Topics: Rupee | Stock | Market | Money Matters | Currency |