Rupee rally continues for third day

The rupee ended two weeks of losses on speculation some banks are selling dollars to raise local-currency funds before taxes due next week reduces money in the banking system.

The rupee gained for the third day, recouping this week's loss, also after the benchmark stock index yesterday rose the most in eight months. The surge spurred optimism overseas funds will return to buy equities after they sold a net $820.9 million in the seven business days through March 6.

Companies may pay as much as Rs 40,000 crore in advance taxes by March 15, according to a Bloomberg survey of bond traders.

"Improved sentiment on the stock front after yesterday's rebound and better dollar supplies are showing on the rupee,'' said L V Prasad, chief currency trader at Mumbai-based IndusInd Bank.