Rupee surges on stocks rally

Rupee surges on stocks rally
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First Published: Thu, Mar 26 2009. 09 28 PM IST
Updated: Thu, Mar 26 2009. 09 28 PM IST
Mumbai: The rupee rose on Thursday as the stock markets continued their gain for the fourth straight day and appreciation in the regional currencies raised hopes that rising risk appetite among investors would lead to sustained fund inflows.
The partially convertible rupee ended at Rs50.59/61 per dollar, off a high of Rs50.46 but up 0.3% from a previous close of Rs50.74/75. Markets will be shut on Friday for a holiday.
The rupee rose marginally over the holiday-shortened week, after gaining 1.7% in the previous week, and is now 3.2% above its record low of Rs52.2 touched earlier in March.
“There was good interest seen both ways. Foreign institutional investors and exporters were selling dollars while month-end demand kept the rise in check,” a senior dealer with a foreign bank said.
“It is likely to trade like this for a while in a 50 to 51 band, but a lot would depend on how the equity markets pan out,” he added.
India’s main stock index rose 3.5% to close above 10,000 points for the first time since 6 January, the day before revelations of massive fraud at Satyam Computer had knocked the market lower.
The stock index has risen nearly a quarter from a 2009 low hit on 6 March.
Foreign investors have bought a net $619 million worth of shares in the past nine sessions, a key factor helping the rupee’s recent rise, trimming their net sales in 2009 to $1.7 billion.
Dealers said gains in Asian currencies boosted sentiment for the rupee, but its strength was tempered by oil-related dollar demand.
Oil is India’s largest import and refiners are the biggest buyers of dollars in the domestic currency market with their demand peaking at month-end, when they make their payments, which usually pressures the rupee lower.
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First Published: Thu, Mar 26 2009. 09 28 PM IST
More Topics: Rupee | Currency | Dollar | Foreign Exchange | Markets |