The rupee strengthened and the benchmark stock index rallied on optimism that accelerating economic growth will attract overseas funds to local assets.
The rupee advanced 1.6 per cent since the end of February, as overseas funds pumped more than $2 billion into Indian shares, boosting their total holdings to a record $75.3 billion. Asian currencies gained against the dollar after the Federal Reserve pledged to keep its benchmark interest rate near zero for an “extended period” to help sustain a recovery in the world’s biggest economy.
The rupee climbed 0.5 per cent to 45.3525 a dollar as of the 5 pm close in Mumbai, according to data compiled by Bloomberg. It might trade between 45.20 and 45.70 this week, Bhatt said. The currency and bond markets were closed yesterday for a holiday. Offshore contracts indicated the rupee would trade at 45.40 to a dollar in a month, compared with expectations of 45.67 yesterday. 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, which almost doubled in the past year, gained 0.6 per cent today. The Dollar Index, used by the ICE to track the greenback against the currencies of six major US trading partners, fell for a second day.
