Mumbai: The rupee rose in early trades on 23 October as gains in Asian stockmarkets eased concerns that foreigners would take money out of local shares despite curbs on one method of investment some have been using.
At 9:27 am (0357 GMT), the partially convertible rupee was at 39.70/71 per dollar, half a percent above Monday’s close of 39.89/90.
“Stock markets may open up after the regulator’s clarifications yesterday and strong Asian markets and it seems that inflows will continue in the coming months,” said a trader at a state-run bank.
The Indian stock market was up more than 2% in early trade, and other Asian markets were also stronger.
India’s stock market watchdog said on Monday it would move ahead with plans to curb flows of anonymous foreign funds into shares and would speed up regulatory clearance for foreigners keen to invest transparently.
The regulator meets on Thursday to take a final decision, and markets have been worried that the proposals could lead to a slowing of capital inflows -- a key driver for the rupee’s rally this year.
Finance minister Palaniappan Chidambaram told Reuters the moves could stem the rupee’s appreciation, though that was not the main aim.
Foreign investors sold a net $1.2 billion of stocks in three days last week after the proposed curbs were announced.
That has lowered their net investment this year to $16.7 billion, but it is still running well above the full-year record inflow of $10.7 billion in 2005.