Mumbai: The rupee strengthened for the first time this week as gains in the nation’s stocks tempered concern overseas investors are pulling out money.
The currency, which fell the most in 15 months on Tuesday, rebounded as data from the Securities and Exchange Board of India showed foreigners bought more Indian shares than they sold on 28 May and 31 May, following nine days of net sales. The benchmark Sensex index rose 1% after a government report on Tuesday showed the economy grew 8.6% last quarter, accelerating from 6.5% in the prior three months.
“The rupee recovered today as stocks were showing a positive trend,” said Sudarshan Bhatt, chief currency trader in Mumbai at state-owned Corporation Bank. “It may gain further this week as offshore forwards are indicating an improvement in sentiment.”
The rupee advanced 0.4% to 46.975 per dollar at close in Mumbai, according to Bloomberg data.
The currency slumped 1.7% on Tuesday, its biggest decline since 17 February 2009. The rupee dropped 4.3% in May, the worst performance among Asian currencies after South Korea’s won.
Offshore forwards indicated the rupee will trade at 47.45 to the dollar in three months, compared with expectations of 47.79 at the end of last week. 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.