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Re closes at a 2-week high as foreign funds turn net buyers

Re closes at a 2-week high as foreign funds turn net buyers
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First Published: Wed, Feb 04 2009. 11 40 PM IST

Rising currency: The rupee closed at 48.81 to a dollar at close of trade in Mumbai, the highest close it has seen since 19 January. Daniel Acker / Bloomberg
Rising currency: The rupee closed at 48.81 to a dollar at close of trade in Mumbai, the highest close it has seen since 19 January. Daniel Acker / Bloomberg
Updated: Wed, Feb 04 2009. 11 40 PM IST
By Anil Varma / Bloomberg
Mumbai: The rupee closed at the highest level in at least two weeks as stock gains fuelled optimism that risk aversion will wane and overseas funds will return to buy emerging-market assets.
Rising currency: The rupee closed at 48.81 to a dollar at close of trade in Mumbai, the highest close it has seen since 19 January. Daniel Acker / Bloomberg
The currency strengthened for a second day after foreign funds bought more Indian shares than they sold in the five-day period through 30 January, following three weeks of net sales. The MSCI Asia Pacific Index of shares advanced 1.7% and the Bombay Stock Exchange’s benchmark index, the Sensex, rose 0.6%.
The rupee is stronger as expected since global stock markets are reflecting an improvement in investor confidence, said Amit Garg, a currency trader at state-owned Allahabad Bank in Mumbai.
The rupee closed at 48.81 a dollar at 5pm in Mumbai, the highest since 19 January, versus 48.825 on Tuesday.
Meanwhile, India’s bonds fell, pushing yields to the highest level in almost two months, on concern the government will increase debt sales as it steps up spending. The price of the most-traded security maturing in 2018 dropped for a seventh day, its worst run in almost seven months.
The yield on the 8.24% note due April 2018 rose 12 basis points to 6.49% at the 5.30pm close in Mumbai, according to Reserve Bank of India’s trading system. The price fell 89 paise per Rs100 face amount, to Rs112. A basis point is 0.01 percentage point.
Anoop Agrawal contributed to this story.
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First Published: Wed, Feb 04 2009. 11 40 PM IST
More Topics: Rupee | Foreign Fund | Buyers | Shares | Trade |