Rupee at near 2-mth high on strong equities, weak dollar

Rupee at near 2-mth high on strong equities, weak dollar

Mumbai: The rupee rose to its highest in nearly two months on Monday, extending gains into a third straight session, as a falling dollar encouraged buying in the local unit and buoyant equities raised hopes of capital inflows.

The partially convertible rupee ended at Rs47.635/645 per dollar, off an intraday peak of 47.63 — its highest since 12 June, and about 0.6% stronger than Friday’s close of Rs47.93/95.

“The dollar’s fall had a significant impact on the rupee’s rise today. We would see the rupee in the 47.50-47.70 range tomorrow," a senior trader at a foreign bank said.

The dollar hit its lowest level in 2009 on Monday as solid banking earnings and a UK survey showing manufacturing activity unexpectedly expanding boosted the view that the global economy is over the worst.

Higher share prices also bolstered sentiment in favour of the local unit, traders said.

The main share index climbed 1.6% on Monday to its highest close in 14 months, led by energy giant Reliance Industries. Traders said the market picked up steam after European markets rose to a new high this year on encouraging news from banks.

Foreign funds have bought almost $7.5 billion worth of shares this year, following net sales of more than $13 billion in 2008.

One-month offshore non-deliverable forward contracts were quoting at 47.64/74, little changed from the onshore spot rate.