Mumbai: The rupee appreciated for a second day on speculation an improving global economy will prompt investors to favour riskier assets, helping emerging markets attract funds.
The local currency on Monday jumped the most in eight weeks before a report showed manufacturing in the US, the world’s largest economy, expanded at the fastest pace in more than three years. The benchmark Bombay Stock Exchange’s Sensex on Tuesday closed at its highest in 21 months. The MSCI Asia Pacific Index rose to a 16-month high.
“Investment sentiment is improving and there appears no reason why this should not continue,” said Vikas Babu, a currency trader at state-owned Andhra Bank in Mumbai. “I expect inflows to continue and push the rupee further up.”
The rupee rose 0.1% to 46.24 per dollar at close in Mumbai, according to data compiled by Bloomberg. The currency on Monday rose 0.8% to 46.30. It will strengthen 5.2% to 44 this year, according to the median estimate of analysts surveyed by Bloomberg.
Offshore contracts indicate bets the rupee will trade at 46.21 per dollar in a month, compared with 46.31 on Monday.