Rupee strengthened, snapping a two-day loss, on speculation global investors will pump more money into Asian assets as economic growth picks up in the region.
The currency touched a 19-month high after China said its gross domestic product rose 11.9 per cent in the last quarter, the biggest gain in almost three years. India’s Finance Minister Pranab Mukherjee on April 2 forecast growth of as much as 8.75 per cent for the fiscal year that started April 1, following an estimated expansion of 7.2 per cent in the last 12 months. Speculation the central bank will next week raise interest rates for the second time this year also supported the rupee.
The rupee appreciated 0.1 per cent to 44.4425 a dollar as of the 5 pm close in Mumbai. The currency earlier touched 44.165, the strongest level since September 2008. It may trade between 44.00 and 44.50 in the coming days, Paul predicted. India’s financial markets were closed yesterday for a holiday.
Offshore contracts indicate bets the rupee will trade at 44.48 to the dollar in a month, compared with expectations of 44.54 on April 13. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non- deliverable contracts are settled in dollars rather than the local currency.
The Bombay Stock Exchange’s Sensitive Index rose 56 per cent in the past year. The gauge lost 1 per cent on Thursday. Overseas investors increased holdings of local shares to a record $78 billion in the past week and debt to $12.3 billion, also an all- time high, according to the Securities and Exchange Board of India.
