Rupee up 1% with share market gains

Rupee up 1% with share market gains

Mumbai: The Indian rupee edged higher on Monday as a strong opening in the local stock market raised expectations of renewed capital inflows, with steps by the central bank to boost market liquidity also helping.

At 10:10am, the partially convertible rupee was at Rs47.20/21 per dollar, nearly 1% stronger than Friday’s close of Rs47.65/66 per dollar. The rupee has recovered more than 6% from its record low of Rs50.29 hit in late October.

On Friday, the central bank offered to provide foreign exchange liquidity to overseas branches of Indian banks via FX swaps to help them manage short-term funds in the face of difficult credit market conditions.

Indian shares were up 2.4% following gains in Asian markets after moves by China and G-20 nations to fight the global economic slowdown boosted sentiment.

Foreign funds have sold a net $12.7 billion worth of shares so far this year compared to a single-year record purchase of $17.4 billion in 2007.

Dealers said lack of dollar demand from oil refiners was a key factor which has taken off pressure from the local unit. The central bank earlier this month asked bulk buyers of dollars to approach it directly to meet their dollar needs.

One-month offshore non-deliverable forward contracts were quoting at Rs47.45/65, slightly weaker than the onshore spot rate.