Capital inflows, dollar sales boost Rs. to 6-week high
Strengthening for the fourth straight session, the rupee on Tuesday gained a massive 105 paise to close at a nearly six-week high of 54.36 against the US dollar on increased capital inflows and offloading of dollars by banks and exporters. HT reports.business Updated: Jul 04, 2012 02:21 IST
Strengthening for the fourth straight session, the rupee on Tuesday gained a massive 105 paise to close at a nearly six-week high of 54.36 against the US dollar on increased capital inflows and offloading of dollars by banks and exporters.
“The rupee is riding on the wave of positive sentiments and traders are expecting more dollar inflow in coming days,” said Abhishek Goenka, chief executive officer, India Forex Advisors.
“Traders are expecting foreign funds to bring in dollars ahead of the auction of foreign investor limits in government debt.”
The government last week increased foreign investment limits in government debt by US$5 billion to US$20 billion.The increased limits will be auctioned by the Securities and Exchange Board of India on Wednesday.
Institutional investors have turned bullish in the last few days after the government last week said that general anti-avoidance rules, or Gaar, would not apply retroactively, in a big relief to foreign investors.
Foreign investors were net buyers of Rs. 591 crore worth of shares on Monday.
“So far the fundamentals have not changed for the rupee and the current strengthening is because of external factors,” said Rajeev Mahrotri, head of trading, global markets group, Indusind Bank.
“The rupee may reverse its gains in coming days if there are no serious steps taken by the government to speed up reforms.”
The rupee has staged a smart recovery after hitting a record low of 57.32 on June 22.
The unit, however, is still down over 11% from its February 2012 high.
Traders said exporters also sold dollars after the rupee broke past the 54.85 mark.