Rupee hits 13-month high on higher stocks, weak dollar1 min read . Updated: 14 Oct 2009, 07:03 PM IST
Rupee hits 13-month high on higher stocks, weak dollar
Mumbai: The rupee rose to its highest in more than a year on Wednesday on expectations of more capital inflows after shares rose to 17-month high and as the dollar weakened in global markets.
The partially convertible rupee ended at 46.13/14 per dollar, not far from an intraday high of 46.08 which was its strongest since 26 Sept 2008 and about 0.8% stronger than Monday’s close of 46.48/49.
Financial markets were shut on Tuesday for a holiday.
“The dollar’s fall is lifting the rupee. The Sensex touching new heights also helped sentiment," said a trader with a foreign bank.
The 30-share BSE index closed up 1.2% at 17,231.11, having risen to 17,274.59 during trade, its highest since 21 May 2008.
Foreign fund investments into local shares are a key factor determining the direction of the rupee. Foreign investors have bought a net $13 billion worth of shares this year, almost reversing net outflows of more than $13 billion in 2008.
At the day’s high, the rupee had gained 13.3% from a record low of 52.2 in early March and was up 5.7 percent in 2009.
Traders said a weak dollar also helped sentiment. The dollar hit a 14-month low against a basket of currencies on a view that US rates would stay low, while optimism about a global recovery tarnished the US currency’s safe-haven appeal.
One-month offshore non-deliverable forward contracts were quoting at 46.01/11, stronger than the onshore spot rate, suggesting a bullish outlook for the rupee.
In currency futures, the active near-month contracts on the National Stock Exchange and MCX-SX were at 46.1775 and 48.1825 respectively, rising from Monday’s 46.5225 and 46.5250.