Mumbai: The rupee appreciated to its strongest close in more than a month as the equity markets continued their gaining streak for the sixth session on Thursday, raising expectations of sustained fund inflows that would support the currency.
The partially convertible rupee ended at Rs50.00/02 per dollar, its strongest close since 25 February, having risen to Rs49.85 during trade, according to Thomson Reuters data
It had ended at Rs50.19/20 on Wednesday. The market will be closed on Friday for a holiday.
“With stocks remaining in positive territory at the close of trading, It was a sentiment-driven rise for the rupee,” a trader with a state-run bank, said.
“But, there was dollar buying by a public sector bank, which could be for a defence-related payment. This cut the day’s gains for the rupee,” he added.
Indian shares rose 0.6% on Thursday to a six-month closing high. The benchmark 30-share BSE index has risen 12.9% in six sessions, and is up over 34% from its 2009 low hit on 6 March.
Foreign investors have been net buyers of more than $270 million of stocks in early April but are still net sellers of $1.4 billion so far in 2009.
Foreign fund flows have been a key factor for the rupee’s fortunes. Last year foreigners were net sellers of more than $13 billion of stocks, and the rupee fell 19%.
Offshore one-month rates were quoting at Rs50.14/50.24 per dollar, slightly weaker than the onshore spot rate.