Re gains for a second day as stocks rise

Re gains for a second day as stocks rise
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First Published: Thu, Jul 10 2008. 01 14 AM IST
Updated: Thu, Jul 10 2008. 01 14 AM IST
Mumbai: The rupee rose on speculation that capital outflows will slow as the benchmark index of the Bombay Stock Exchange, the Sensex, advanced by the most in a week.
The currency strengthened for a second day as the Sensex was poised to snap a seven-week loss after rising 4.6% on Wednesday.
Asian stocks rose the most in three weeks after JPMorgan Chase and Co.’s chief executive said credit market losses will ease and oil prices dropped almost 6% from an all-time high of $145.85 a barrel reached on 3 July.
“The rupee is following the positive developments in the Asian equity markets,” said P.V. Rao, a currency trader at IndusInd Bank Ltd in Mumbai.
The rupee rose 0.3% to 43.135 a dollar at the 5pm close of trading in Mumbai, according to data compiled by Bloomberg. It may climb to 43 in the next week, Rao said.
The MSCI Asia-Pacific Index rose as much as 2%, the most in three months.
Foreign funds were net sellers of Indian equities on three of the six trading days this month, according to the latest data provided by the Securities and Exchange Board of India. They sold a net $6.6 billion of local shares in 2008, compared with a record $17.2 billion in net purchases last year.
The rupee also gained after crude oil had the biggest two-day decline since March, spurring speculation that India’s import costs will decrease. The country imports 70% of the oil it needs annually.
“I expect the rupee to gain support as crude oil’s decline reduces dollar demand,” IndusInd’s Rao said.
Crude oil fell 3.8% on Tuesday but rose 1.8% to $138.60 on Wednesday morning in New York after Iran test-fired a long-range missile capable of reaching Israel.
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First Published: Thu, Jul 10 2008. 01 14 AM IST