Rupee rises on strong capital flow outlook

Rupee rises on strong capital flow outlook


Mumbai: The Indian rupee inched towards a nine-year high on Friday, 7 September, as dealers bought the unit on hopes of investors flows into the stock market, though concerns about the fallout from the US mortgage market capped gains.

At 9:45am (0415 GMT), the rupee was at 40.69/70 per dollar, rising from the previous close of 40.79/80. It hit a nine-year peak of 40.20 in July.

“There’s some speculative interest in the rupee at the moment, but no one really knows whether the flows to support that interest will pan out," said a senior dealer with a private bank.

Capital flows into rising stocks could bolster the rupee, which has gained more than 8.5% against the dollar this year to be Asia’s best performing currency.

In the first three days of this week, foreign funds bought almost $390 million of Indian shares, after being net sellers of about $1.9 billion last month.

Indian shares rose to a six-week closing high on Thursday as some Asian and European markets boosted confidence despite lingering concerns about the health of the U.S. economy.

Asian currencies were steady to firmer as investors remained cautious and looked to a U.S. jobs report for clues about the Federal Reserve’s next interest rate move on Sept. 18.

Sentiment for the rupee remained buoyant, after data released last week showed India’s gross domestic product grew at a higher-than-expected annual rate of 9.3 percent in the June quarter, raising hopes for renewed overseas investment flows. --------------------------------------------------------------