Mumbai: The rupee completed its biggest weekly gain in two months as foreign funds stepped up purchases of local shares on optimism that a rebound in the global economy will boost firms’ earnings.
The rupee has appreciated 1.6% in the past two weeks, the third best performance among the 10 most active currencies in Asia outside Japan, as overseas investors bought $789 million (Rs3,819 crore) more Indian shares than they sold in the nine days through 23 July.
The Sensex has jumped almost 14% since 10 July as the nation’s biggest drug maker, software exporters and mobile phone operator reported better-than-forecast earnings.
The rupee’s movement is mirroring the trend in equity markets, which is driven by economic fundamentals, said Arun Nagarajan, a currency trader at Kotak Mahindra Bank in Mumbai. The rupee has scope to extend gains.
The local currency advanced 1.1% this week to 48.23 against the dollar at close, according to Bloomberg data. Companies including Ranbaxy Laboratories Ltd, Tata Consultancy Services Ltd and Bharti Airtel Ltd reported profits that exceeded analysts’ estimates, bolstering investors’ confidence that Asia’s third biggest economy will rebound from its worst slump in six years.