Rupee rises on robust shares, stronger euro

Rupee rises on robust shares, stronger euro

Mumbai: The rupee rose on Thursday as buoyant global stock markets raised expectations of more capital inflows into Asia’s third-largest economy and the euro’s gains overseas triggered dollar sales by exporters.

The partially convertible rupee ended at 46.8525/8625 per dollar, off an intraday peak of 46.75 and about 0.30% stronger than its previous close of 47.015/025, when it had touched 47.1550, the lowest since 9 June. “There is now an improved risk appetite after the Dow Jones index rallied and closed above the 10,000 level," said a senior trader with a private bank in Mumbai. A trader at a foreign bank said he expects the rupee to trade in the 46.75-46.95 range on Friday.

Global stocks rose on Thursday on expectations of strong corporate earnings, with Wall Street posting its best one-day gain in about six weeks on Wednesday.

According to Thomson Reuters data, quarterly earnings of S&P 500 companies are expected to rise 27.1% in the second quarter after surging 58.3% in the first quarter.

India’s benchmark BSE Sensex ended more than 1% higher, supported by the global rally in shares.

Foreign funds have bought around $6.9 billion of local shares so far in 2010, after pumping in $17.5 billion in 2009.

The euro’s gains against the dollar also underpinned sentiment. The single currency hit a two-month high against the dollar after strong Australian jobs data boosted higher-risk currencies.

The dollar index was up about 0.1% at the time of the local market’s close.

The European Central Bank (ECB) kept its main interest rate on hold at a record low of 1.0% on Thursday, in line with market expectations.

One-month offshore non-deliverable forward contracts were quoted at 47.03, 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 ended at 46.9975 and 46.9875 respectively, with the total traded volume on the two exchanges at $5 billion.