Rupee rises the most in two weeks

Rupee rises the most in two weeks

Mumbai: The rupee rose the most in at least two weeks on speculation stock gains would prompt global funds to buy more local equities.

The currency strengthened a second day after latest data from the stock market regulator showed that net purchases by overseas funds on 26 August was the highest since 14 August.

“The trend in stocks is boosting investor confidence and supporting the rupee," said Vikas Babu, a currency trader at state-owned Andhra Bank in Mumbai. “The bullishness toward the rupee is increasing."

The rupee rose 0.5% to 48.665 per dollar, according to data compiled by Bloomberg.

The rupee had a weekly loss on speculation companies increased dollar purchases to meet bill payments at month-end.

The currency reached 49.055 on Thursday, the lowest level since 13 July, with rising oil prices pushing up costs for importers such as Indian Oil Corp. Ltd, the nation’s largest refiner.

Crude reached $75 a barrel this week, the highest in at least 10 months, and is up 5% so far in August.

“Importers are preferring to meet most of their dollar needs because there’s more demand than supply," said Naveen Raghuvanshi, a trader at Development Credit Bank Ltd in Mumbai. “The bias is tilting towards the dollar."

Offshore contracts indicate bets the rupee will trade at 48.78 to the dollar in a month, compared with expectations for a rate of 49 on Thursday.

Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non-deliverable contracts are settled in dollars rather than the local currency.