Rupee high as stocks rise, dlr falls

• rajesh_sangvi
• June 2, 2009

The rupee strengthened to its highest in seven months on Wednesday as the U.S. unit continued its southward journey against major
Forex Converter
Convert
Rs.To
currencies. Gains in the stock market also boosted sentiment. At 10:15 a.m., the partially convertible rupee was at 46.76/77 per dollar, its strongest since Nov. 5 last year and 0.5 percent above its Tuesday’s close of 47.02/03.

“The rupee has risen in line with international trends; the euro, pound have gained overseas, Asian units are also higher,” said Manjunath Kamath, head of foreign exchange trading at state-run Karnataka Bank.

The dollar hovered above fresh lows for the year on Wednesday after U.S. pending home sales posted their third straight monthly rise, fuelling optimism about the economy and reducing safe-haven demand for the greenback.

The central bank is suspected to have bought dollars through state-run banks around 46.85, but the intervention waned after the stock market opened, three dealers said.

“They were there in the morning at 46.85 levels, now they have let it loose,” said J.Moses Harding, head of global markets at IndusInd Bank.

The Reserve Bank of India has previously said they buy or sell dollars in the market to smoothen excessive volatility.

Dealers said the rupee was likely to trade in a 46.70 to 46.90 band during the session.

India’s main stock index <.BSESN> rose past 15,000 points for the first time in almost nine months on Wednesday, as growing hopes the global recession may be easing lifted sentiment across Asia.

Foreigners have invested a net $4.5 billion in shares so far in 2009, after having pulled out more than $13 bn last year. These inflows have been a key factor in the rupee’s 11.6 percent rise from its record low of 52.2 hit in early March.
News beuro,

• Last Modified: June 2, 2009
• Filed Under: Latest News, MARKETS, NATION, WORLD