Mumbai: The Indian rupee further extended gains on Monday to fresh two-week highs as losses in the dollar versus major currencies and sharp gains in the local stock market boosted hopes for more capital inflows.
At 4:00pm, the partially convertible rupee was at Rs48.18/20 per dollar, its strongest since 6 July and 1.1% stronger than its Friday’s close of Rs48.73/74.
Indian shares rose 3% to their highest close in 5 weeks as a last-minute rescue of troubled US lender CIT Group and a raft of positive corporate earnings from across the globe fuelled investor appetite for riskier bets.
Dealers said dollar demand from oil companies was preventing a further rise in the rupee. Oil is India’s largest import and refiners are the biggest buyers of dollars in the domestic currency market.
The dollar fell broadly on Monday, hitting a six-week low against the euro as traders flocked to riskier assets as speculation for solid corporate earnings boosted share prices.
In the currency futures market, the most traded near-month contract on the National Stock Exchange and MCX-SX was quoting at Rs48.2350 each, with the total traded volume on the two exchanges at about $1.45 billion.