Mumbai: The rupee edged higher on Monday as a strong opening in the local stock market raised expectations of renewed capital inflows, with steps by the central bank to boost market liquidity also helping.
Rupee’s done with falling — that’s good
At 10:10 a.m., the partially convertible rupee was at 47.20/21 per dollar, nearly 1 percent stronger than Friday's close of 47.65/66 per dollar. The rupee has recovered more than 6 percent from its record low of 50.29 hit in late October.
"Gains in the stock market and the dollar liquidity provided by the Reserve Bank of India's announcement on Friday is helping the rupee," a senior dealer with a private bank said. "It will likely stay in a band of 46.80 to 47.40 today".
$50-billion debt shadow over rupee
On Friday, the central bank offered on Friday to provide foreign exchange liquidity to overseas branches of Indian banks via FX swaps to help them manage short-term funds in the face of difficult credit market conditions.
The BSE Sensex was up 2.4 percent following gains in Asian markets after moves by China and G20 nations to fight the global economic slowdown boosted sentiment.
Foreign funds have sold a net $12.7 billion worth of shares so far this year compared to a single-year record purchase of $17.4 billion in 2007.
Dealers said lack of dollar demand from oil refiners was a key factor which has taken off pressure from the local unit. The Reserve Bank earlier this month asked bulk buyers of dollars to approach it directly to meet their dollar needs.
