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Rupee climbs to 11-week high on easing risk aversion

Rupee climbs to 11-week high on easing risk aversion
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First Published: Thu, May 07 2009. 07 54 PM IST
Updated: Thu, May 07 2009. 07 54 PM IST
Mumbai: The rupee rose to the highest level in at least 11 weeks on speculation that better-than-estimated economic data from the US and Australia will temper risk aversion among global investors.
It climbed for a third day this week as a rally in Asian equities added to optimism that demand is increasing for emerging market assets. Offshore funds bought more Indian shares than they sold on 17 of the last 19 trading days, stock exchange data show. The rupee also rose as a shrinking trade deficit reduces demand for the US currency.
“The rupee has reason to strengthen if you put together the positive shift in stock market sentiment and the turnaround in foreign investment flows,” said Krishnamurthy Harihar, head of treasury at Development Credit Bank Ltd in Mumbai. The currency strengthened 0.8% to 49.26 per dollar at close of trade in Mumbai, the highest closing level since 16 February. The rupee has gained 3% this quarter. Offshore contracts show traders are betting the rupee will drop to 49.34 in a month, compared with expectations for a rate of 49.67 on Wednesday. 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: Thu, May 07 2009. 07 54 PM IST
More Topics: Rupee | Dollar | Markets | India | Currency |