Rupee strengthens on bullish stocks, weak dollar

Rupee strengthens on bullish stocks, weak dollar

Mumbai: The rupee rose on Thursday after a rally in local shares raised expectations for capital inflows, while the dollar’s weakness in global markets also helped.

The partially convertible rupee ended at Rs48.11/12 per dollar, off an intraday peak of Rs48.05, and about 0.5% stronger than Rs48.37/38 at close on Wednesday when it dropped during trade to Rs48.50 - its weakest since 30 July.

“Clearly, we could see the rupee rising beyond the 48 level tomorrow if the dollar stays weak and could strengthen more if stocks continue to rise," said a trader with a foreign bank.

The 30-share BSE index rose 3.3% to its best close in more than a week as a proposal to overhaul the country’s tax system, and global equities rally on upbeat comments from the Federal Reserve lifted sentiment.

Foreign funds have bought a net $7.4 billion of Indian stocks in 2009 after having sold more than a net $13 billion last year.

The Fed said on Wednesday the world’s largest economy was showing signs of levelling out, two years after the onset of the deepest financial crisis in decades.

The dollar index hit the lowest in a week, stung by growing demand for riskier assets including commodities and higher-yielding currencies after the Fed’s comments.

The euro hit a one-week high against the dollar on Thursday.

One-month offshore non-deliverable rupee forward contracts were quoting at 48.11/12, same as the onshore spot rate.