The rupee recorded its biggest weekly advance in 13 years on optimism that the new UPA government with revive disinvestment and attract foreign investment.
Continuing the trend, the rupee opened at 47.11 to a dollar and strengthened to 46.72 in intra-day trading, its highest in five months.
The rupee strengthened 4.9 per cent this week, the most since March 1996, to 47.12 per dollar at 5pm in Mumbai, according to data by Bloomberg. It had closed at 49.40 on last Friday. The rupee has gained 6.5 per cent this month, the best performance among the 10 most active Asian currencies.
Dealers said expectations of better economic prospects under the new government drove trades. Also, the US dollar was battered against most global currencies on fear of a possible downgrade in the US sovereign rating, they said.
However, further surge was limited as some state-owned banks bought the greenback, reportedly on behalf of the Reserve Bank of India, dealers said. Today, there were some FII inflows as well, said a dealer with a foreign bank. Dollar sales by exporters also aided the rupee’s rise, dealers said.
The benchmark one-year forward premium ended at 2.49 per cent, compared with 2.39 per cent yesterday. Dollar/rupee futures on the National Stock Exchange and the MCX ended sharply down, in line with the spot rate.
The rupee may stay firm on Monday as banks may sell dollars due to the global weakness in the greenback. Dollar sales by exporters and inflows from foreign funds may also aid the Indian currency’s rise. On NSE, one month dollar/rupee contract ended at 47.14 against 47.39 on Thursday.
One-month contract on the MCX ended at 47.1475 rupees per $1 against 47.3900 rupees Thursday.
However, dollar demand from state-owned banks on behalf of the RBI may limit the rupee’s rise. Importers’ dollar demand may also temper gains made by the rupee.
Source : Business Line