The Indian rupee rose to a new four-month peak against the US dollar on Wednesday, as the greenback came under pressure amid concerns that the Federal Reserve's efforts to revive economic growth and avoid deflation will undermine the American currency.
The partially-convertible Indian currency was last trading at 45.5550 per dollar after touching a day's low of 45.6150 and a day's high of 45.4575. It had closed at 45.6750 yesterday.
The currency advanced for a sixth successive day today, the longest winning streak since March.
The rupee had gained 1.4% last week. The currency, which today touched the strongest level since May 14, has climbed more than 3% this month, the second-best performance among Asian currencies.
It is up over 2% in 2010. In 2009, the rupee had gained nearly 5% following an 80% rise in the BSE Sensex.
The rupee has appreciated in each of the last three weeks, as bright economic prospects have led to record inflows from the overseas investors.
Asia’s third-largest economy grew by 8.8% last quarter (April to June 2010), the fastest pace since 2007, the Government said on Aug. 31. It is likely to grow by over 8% in the year that ends in March 2011.
The FIIs have pumped in close to US$3bn into Indian equities so far in September. The foreign funds have poured in nearly US$16bn into Indian stocks so far this year on top of the US$17.5bn invested last year.
The BSE Sensex rose by over 4% last week and touched the highest level since January 17, 2008 today before closing marginally down.
Meanwhile, the dollar extended its decline against most rival currencies while gold touched a new record high after the Fed said that it stands ready to provide additional stimulus to bolster the US economy.
