Mumbai: The Indian rupee extended gains for a second day on Friday and traders said they would be watching quarterly earnings of companies for cues on economic outlook.
Infosys Technologies Ltd, India’s No. 2 software services exporter, reported a better-than-expected 17.2% rise in profit in the June quarter.
At 11:08am, the partially convertible rupee was at Rs48.65/66 per dollar, stronger than Rs48.72/73 at close on Thursday when it hit Rs49.06 during trade, its lowest since 15 May.
The main BSE stock index seesawed in early trade.
Export-focused Infosys was the first top company to announce quarterly results and dealers said earnings of companies would set the tone for foreign fund inflows.
“There is not much pressure on the rupee now as oil is also soft and the market has largely shrugged off the negative sentiment following the budget,” the chief dealer with a private bank said.
Oil was trading above $60.43 per barrel. India imports about 70% of its crude and lower prices could reduce demand for dollars. Oil prices have dropped from peaks of $70 last month.
The dealer expected the rupee to strengthen towards Rs48.30-48.50 in the coming days, but said it may come under renewed pressure if monsoon rains were not satisfactory.
The monsoon rains were 8% below normal in early July, reviving after the driest June in 83 years.
Farm output contributes about a fifth of India’s gross domestic product and the rains are crucial to boost economic growth.
Finance Secretary Ashok Chawla said this week the economy could grow 7% in 2009/10, higher than last year’s 6.7%.
Foreigners have bought about $1 billion of stocks so far this month, taking net inflows in 2009 to nearly $6 billion, a key factor in the rupee’s rise from its record low of 52.2 in March.