Rupee up on local shares; optimistic dollar inflow view

Rupee up on local shares; optimistic dollar inflow view

Mumbai: The rupee was strong in afternoon trade on Monday as upbeat local shares and the central bank’s hefty rate increase last week improved outlook on dollar inflows.

Improved global risk appetite after top US lawmakers struck a deal to avoid a debt default could augur well for inflows and in turn the local currency, traders said.

At 1:00pm, the partially convertible rupee was at 44.06/07 per dollar, stronger from Friday’s closing of 44.185/195.

Foreign funds have poured about $2.9 billion into Indian shares over the past five weeks, according to data from the Securities and Exchange Board of India.

The local benchmark share index rose more than 1% on Monday, tracking firm Asian peers and the US debt ceiling deal.

The euro was at $1.4 385 versus

$1.4449 when the rupee closed on Friday, but the index of the dollar against six major currencies was down 0. 05% to 73. 860 points, but still higher from 73.709 points at end of local forex trade on Friday.

After months of vitriolic discord, Republican and Democratic lawmakers were expected to vote on Monday on a White House-backed deal to raise the US borrowing limit and avert an unprecedented default.

The Reserve Bank of India stunned investors last Tuesday by raising interest rates by 50 basis points, showing unexpected resolve in fighting persistently high inflation despite slowing growth.