Rupee strengthens tracking equity gains

Rupee strengthens tracking equity gains

Mumbai: The rupee strengthened on Friday after fresh dollar supplies hit the local market as Asian stock markets rose, raising expectations of more capital inflows into Asia’s third-biggest economy.

At 10:00 am, the partially convertible rupee was at 46.6125/6250 per dollar, off an early high of 46.56, and about 0.3% stronger than Thursday’s close of 46.77/78. “It’s a profound sell-off in dollars and we are going towards 46.50 levels," said Naveen Raghuvanshi, group associate vice president at Development Credit Bank in Mumbai.

The BSE benchmark was up 0.4% up. Foreign investors are net buyers of $11.3 billion of domestic equities so far in 2010, adding to last year’s record $17.5 billion inflows.

The euro edged up against the dollar, but the yen weakened on a report that Japan’s Prime Minister and the head of its central bank would meet to discuss the currency’s export-sapping strength.

The dollar index, an indicator of the US currency’s strength against six majors, was down 0.2%. Most Asian currencies also rose against the dollar.

One-month offshore non-deliverable forward contracts were at 46.81, weaker than the onshore spot rate.

In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX were at 46.7150 and 46.7175 respectively, with total traded volumes on both exchanges at a low $900 million.