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Rupee cuts losses on strong IIP data, stocks rise

Rupee cuts losses on strong IIP data, stocks rise
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First Published: Mon, Oct 12 2009. 07 16 PM IST
Updated: Mon, Oct 12 2009. 07 16 PM IST
Mumbai: The rupee trimmed early losses on Monday as stronger-than-expected industrial data added to signs the economy was recovering and the stock market’s biggest gain in seven weeks offset the impact of broad-based dollar strength.
The partially convertible rupee closed at 46.48/49 per dollar, off an intraday trough of 46.6850 but still about 0.2% weaker than its previous close of 46.40/42.
Last Thursday, the rupee had risen to 46.22, its strongest since 26 September 2008.
The currency market will be closed on Tuesday for elections in the western state of Maharashtra.
“Clearly, a robust IIP (index of industrial production) and the Sensex’s rise erased today’s losses for the rupee,” said a trader with a foreign bank.
India’s industrial output grew 10.4% in August from a year earlier, its fastest pace in 22 months. The data boosted the case for higher interest rates although the Reserve Bank of India (RBI) is expected to wait for further signs of sustained recovery before tightening policy.
Indian shares raced up 2.3% on Monday back towards 16-months hit last month. Gains in shares normally raise expectations of foreign inflows, which boosts the rupee.
Foreign investors have bought a net $12.8 billion of stocks so far this year, including about $4 billion in September, almost reversing net outflows of more than $13 billion in 2008.
The rupee had weakened in early trades, tracking the gains for the dollar, which hit a two-week high against the yen.
One-month offshore non-deliverable rupee forwards were quoted at 46.41/51, little changed from the onshore spot rate.
In currency futures, the active near-month contracts on the National Stock Exchange and MCX-SX were at 46.5225 and 46.5250 respectively, stronger than Friday’s 46.6750.
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First Published: Mon, Oct 12 2009. 07 16 PM IST
More Topics: Markets | India | Rupee | Dollar | Money Matters |