Mumbai: The rupee rose on Wednesday as local shares snapped a four-day losing streak and expectations of a recovery in economic growth after this week’s robust factory data lifted sentiment.
The partially convertible rupee ended at 45.6050/6150 per dollar, about 0.2% stronger than its previous close of 45.71/72. It had risen to 45.2850 on Monday, its strongest since 22 September 2008. “We had news of major foreign institutional investments. If these flows hold, the rupee is set to rally. The growth forecasts are very bullish,” said a senior dealer with a foreign bank.
The BSE benchmark Sensex ended 0.5% stronger. Foreign investments in local equities helped the rupee recover more than 12% till the end of 2009 from a record low of 52.2 per dollar hit in March.
Foreign investors have bought about $1.7 billion in local equities so far this month, after investing more than $17 billion in 2009.
Strong factory production growth in November have also raised expectations that economic growth would improve in the 2009-10 fiscal year. Data on Tuesday showed industrial output rose an annual 11.7% in November, beating market forecasts.
One-month offshore non-deliverable forward contracts were at 45.61/66, little changed from the onshore spot rate.
In the currency futures market, the most traded near-month contracts on the National Stock Exchange and MCX-SX were at 45.69 and 45.6825 respectively.