Rupee completes its best week in 12 years

Rupee completes its best week in 12 years
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First Published: Fri, Nov 07 2008. 11 07 PM IST
Updated: Fri, Nov 07 2008. 11 07 PM IST
Mumbai: The rupee completed its best week in more than 12 years on optimism that falling borrowing costs worldwide will boost investor demand for emerging market assets.
The currency extended last week’s gains as central banks in the UK, Europe, Australia, South Korea and India added to last month’s interest rate cuts, helping global stocks rebound. Overseas funds bought $543 million (Rs2,590 crore) more Indian shares than they sold in the four trading days through 4 November, according to data released by the nation’s capital markets regulator.
“The outlook for equities is much better than what it was at the peak of the global credit crisis,” said K.V. Mallik, treasurer at state-owned UCO Bank in Kolkata. “The climate for investments will improve soon and will help the rupee.”
The rupee climbed 3.8% this week to 47.66 a dollar in Mumbai, according to data compiled by Bloomberg. That is the biggest weekly gain since March 1996, making it the best performer among Asia’s 10 most-active currencies outside Japan.
The Bank of England cut its key rate on Thursday to 3%, the lowest level since 1955. The 1.5 percentage-point reduction was the biggest in 16 years. The European Central Bank followed with its second half-point cut in a month. The action in Europe followed decisions last week by the US Federal Reserve and Bank of Japan to lower rates.
Bank of Korea dropped its benchmark on Friday for a third time in a month. Australia’s central bank had cut rates on 4 November, the third reduction in as many months. The Reserve Bank of India cut interest rates for the second time in two weeks on 1 November.
The Bombay Stock Exchange Sensitive Index has rebounded 17% since 27 October. The index added 2.4% on Friday.
The value of equities worldwide recovered to $31.8 trillion on 6 November, from $29.4 trillion, the lowest since 2003, reached on 27 October, Bloomberg data show.
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First Published: Fri, Nov 07 2008. 11 07 PM IST