Rupee advances for third week on continued fund inflows

Rupee advances for third week on continued fund inflows
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First Published: Fri, Sep 25 2009. 11 02 PM IST

High on optimism: Rupee reached its highest level in about a month after data showed global funds bought more equities than they sold. Rajkumar / Mint.
High on optimism: Rupee reached its highest level in about a month after data showed global funds bought more equities than they sold. Rajkumar / Mint.
Updated: Fri, Sep 25 2009. 11 02 PM IST
Mumbai: The rupee rose for a third week as overseas funds added to their holdings of local assets to benefit from growth in Asia’s?third?largest economy.
The rupee on Friday reached the highest level in little more than a month after the Securities and Exchange Board of India (Sebi) showed global funds bought more equities than they sold for a 13th straight day, the longest streak since 4 August.
High on optimism: Rupee reached its highest level in about a month after data showed global funds bought more equities than they sold. Rajkumar / Mint.
India’s $1.2 trillion (Rs57.6 trillion) economy expanded 6.1% in the three months to June, second only to China among regional economies.
“The movement of the equity markets is suggesting that confidence of investors is getting reinforced,” said Sanjay Arya, treasurer at state-owned Bank of Maharashtra in Mumbai. “The rupee is riding on that sentiment and I expect the trend to continue.”
The currency rose 0.3% this week to 47.98 per dollar at close in Mumbai, according to data compiled by Bloomberg. Markets are closed on 28 September owing to Dusshera.
Net stock purchases by global money managers this year exceeded $11 billion, according to data provided by Sebi. The rupee still slipped on Friday on speculation importers increased purchases of foreign currency to settle month-end bills. The dollar gained on speculation Group of Twenty leaders will agree to tighten rules on investment, boosting demand for safe-haven currencies. US treasury secretary Timothy Geithner said on Thursday the US has a responsibility to ensure the dollar stays the world’s reserve currency.
“The dollar is in favour for fundamental reasons,” said Sudarshan Bhatt, chief currency trader at state-owned Corporation Bank in Mumbai. “As far as the local market is concerned, dollar demand has strengthened to meet month-end payments and because of the holidays next week.”
Offshore contracts indicate bets the rupee will trade at 48.07 a dollar in a month, compared with expectations of a rate 48.21 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.
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First Published: Fri, Sep 25 2009. 11 02 PM IST
More Topics: Rupee | Sebi | Sanjay Arya | Sudarshan Bhatt | Dollar |