The rupee rose the most in a week after the nation’s finance chiefs, along with their counterparts in the Group of 20 (G-20) nations, pledged to refrain from intervening in currency markets to support exports.
G-20 finance ministers and central bankers vowed to avoid “competitive devaluation” on October 23, following talks in South Korea. Reserve Bank of India Deputy Governor Subir Gokarn said October 14 policy makers may buy dollars to combat appreciation that hurts exporters. The Bombay Stock Exchange’s Sensitive Index, or Sensex, rose 0.7 per cent today to 20,303.12 as exchange data showed foreigners bought more Indian shares than they sold every day since August.
The rupee advanced 0.6 per cent to 44.345 per dollar as of the 5 pm close in Mumbai, its biggest gain since October 14, according to data compiled by Bloomberg. The currency has strengthened 5.9 per cent in the past three months and touched 43.96 on October 15, the strongest level since August 2008.
Funds based abroad have pumped a record $24.3 billion into Indian equities this year and bought $9.8 billion of local bonds, seeking to profit from an improving economy. Gross domestic product will climb 9.7 per cent this year following growth of 5.7 per cent in 2009, the International Monetary Fund forecast October 6.
Not volatile
Finance minister Pranab Mukherjee told Bloomberg Television in an interview October 22 that he is not in favour of “competitive devaluation.” The Indian currency is not yet at a stage where it could be termed “volatile,” Trade Minister Anand Sharma said today. “The country is on track to meet its export growth target of close to 15 per cent” for fiscal year 2010-11, he said.
Merchandise exports in September rose to a six-month high, narrowing the trade deficit to the least in a year, data provided by Commerce Secretary Rahul Khullar showed.
Offshore forwards indicate the rupee will trade at 44.94 to the dollar in three months, compared with expectations of 45.21 on October 22. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.