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Rupee climbs for a second week, forex reserves rise

Rupee climbs for a second week, forex reserves rise
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First Published: Fri, Feb 06 2009. 09 29 PM IST
Updated: Fri, Feb 06 2009. 09 29 PM IST
Mumbai: The rupee advanced for a second week as stock gains increased optimism overseas funds will return to buy emerging-market assets.
India’s foreign-exchange reserves also rose $990 million (about Rs4,800 crore)to $248.6 billion in the week ended 30 January, the central bank said.
The currency appreciated for the fourth day, its best run in more than a month, as offshore non-deliverable forward contracts showed traders reduced bets for how far the rupee will decline in a month. The MSCI Asia Pacific Index of stocks climbed for a second week and India’s benchmark index, the Sensex, rose to a one-week high.
“The global equity markets appear to be less volatile which will help the rupee,” said Vikas Babu, a currency trader at state-owned Andhra Bank in Mumbai. “I expect flows into India to rise and the rupee to advance in the near term.”
The rupee strengthened 0.4% this week to 48.695 a dollar at close in Mumbai, the highest since 19 January, according to data compiled by Bloomberg. It may advance to 48.50 in a week, Babu said.
The government will announce more measures to arrest the slowdown, finance minister Pranab Mukherjee said. The steps will be aimed at labour-intensive industries in India’s economy, which may expand around 7% in the fiscal ending 31 March, Mukherjee said in New Delhi on Friday.
Offshore contracts indicate traders bet the rupee will trade at 48.81 to the dollar in a month, compared with expectations for 49.05 a week ago. 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.
Foreign-currency assets increased $589 million to $238.9 billion, while the nation’s gold reserves rose $399 million to $8.88 billion, the Reserve Bank of India said in an emailed statement.
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First Published: Fri, Feb 06 2009. 09 29 PM IST