Rupee moves up on buying support cues from banks

Rupee moves up on buying support cues from banks

Mumbai: The rupee rose to the highest in more than a month on speculation banks will buy the currency to boost cash before corporate clients pay tax, which is due this week.

The currency climbed for a sixth day as companies prepare to pay the second tax instalment by 15 September for the fiscal year that started 1 April. The rupee also advanced on optimism a share sale by India’s biggest power transmission company, Power Grid Corp. of India Ltd, will attract foreign investments.

“The rupee gained as some banks sold dollars to avoid a cash crunch," said J.P. Singh, a currency trader at the state-owned Union Bank of India in Mumbai. “The rupee is also gaining support from initial public offering (IPO)-related inflows."

The rupee rose 0.3% to close at 40.4425 per dollar in Mumbai, according to data compiled by Bloomberg—the highest since 7 August. The rupee’s 9.4% rally this year is the biggest among Asian currencies. It may rise as high as 40.40 in the coming days, Singh added.

Companies may pay as much as Rs35,000 crore ($8.65 billion) in taxes this week, according to the median estimate in a Bloomberg survey.

New Delhi-based PowerGrid, which is seeking to raise as much as Rs2,980 crore, on 10 September began its offer to sell as many as 573.9 million shares.

The state-run power transmission company’s IPO was oversubscribed 9.24 times in Mumbai as of Wednesday, according to the National Stock Exchange.

The IPO sale will close on Thursday.