Rupee rises to greet Sensex intraday gain

Rupee rises to greet Sensex intraday gain
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First Published: Thu, Sep 06 2007. 12 08 AM IST
Updated: Thu, Sep 06 2007. 12 08 AM IST
India’s rupee rose, ending two days of losses, on speculation gains in the benchmark stock index in the past two weeks will attract overseas investment.
The currency climbed after the Bombay Stock Exchange’s Sensex reached the highest intraday level in almost six weeks on Wednesday. Net purchases of stocks by overseas funds jumped almost nine times in the five days through 31 August from the previous week.
“Stocks have been in positive territory for days and some more flows may come in,” said Puneet Sharma, chief currency trader at state-owned Allahabad Bank Ltd in Mumbai. “We may get dollar supply for two days from parts of the country that had a holiday yesterday.”
The rupee rose 0.1% to close at 40.9325 per dollar in Mumbai, according to data compiled by Bloomberg. The currency fell 1.3% in August— the biggest monthly loss since May 2006. The Sensex, which rose as high as 15,580.86 on Wednesday—the highest intraday level since 26 July 26—is headed for the third weekly gain. The index reached a record high on 24 July as the nation’s economic growth attracted increased investment from abroad.
Overseas investors bought local equities worth $343.6 million (Rs1,409 crore) more than they sold last week, compared with $39.6 million in the previous week, according to data released by the Securities and Exchange Board of India (Sebi).
Economic growth unexpectedly accelerated to 9.3% in the last quarter from 9.1% in the past three months.
The rupee pared gains on concern a global credit tightening from the US subprime crisis will cause capital inflows to slow.
“I am bearish on the rupee,” said Ajay Mahajan, president and head of financial markets at YES Bank Ltd. “India’s balance of payments will be much less of a support for the rupee as trade and current-account deficits widen. The capital account may not compensate for the current-account shortfall as it has done so far.” BLOOMBERG
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First Published: Thu, Sep 06 2007. 12 08 AM IST