* Main stock index up 2.2 percent in week, 14 pct in 2012
* Rupee closes at 48.69 to the dollar
* Seen at 51/dollar by end-Feb - CIMB
(Updates to close)
By Archana Narayanan
MUMBAI, Feb 3 (Reuters) - The Indian rupee posted its
fifth straight weekly gain on Friday, aided by a gush of foreign
funds as investors bet on a monetary easing to boost growth in
Asia's third-largest economy.
Foreign funds have bought $2.6 billion of Indian shares and
$3.2 billion of debt so far this years, data from the Securities
and Exchange Board of India showed.
"There was buying on euphoria that rate cuts are coming,
that inflation is on a secular downturn," said Sailesh K. Jha,
Head of Asia Strategy at Skandinaviska Enskilda Banken in
Singapore, who also noted a return of "risk-on sentiment".
Annual headline inflation, as measured by the wholesale
price index, slowed to a two-year low of 7.47
percent in December, reflecting a sharp decline in food
inflation, altough manufactured product inflation edged up.
The rupee ended at 48.6850/6950 to the dollar,
close to the day's high of 48.67, a level not seen since Oct.
31. It closed at 49.15/16 on Thursday.
The Indian stock market's rise of nearly 14 percent this
year has kept up hopes of increased foreign fund inflows. The
market rose 2.2 percent this week.
Recent measures by the Reserve Bank of India to curb
corporate and interbank speculation, along with several steps to
attract funds from non-resident Indians and foreign investors,
have accelerated dollar inflows, supporting the rupee.
(For details of steps taken by the RBI to curb the rupee's
volatility and increase inflows, see: )
The rupee posted its largest monthly gain in at least 17
years in January, according to Thomson Reuters data.
The rupee's 7.45 percent gain in January followed a 16
percent drop in 2011, when it was Asia's worst performing
currency. However, many traders do not expect the gains to hold.
"It looks to be overbought and is likely to see a
correction," said Suresh Kumar Ramanathan, regional rates and FX
strategist CIMB in Malaysia, who expects the rupee to be trading
back below 51 to the dollar by the end of February.
"The dollar will remain strong and with Greece likely to
miss its maturity payments in early march, the market will see
risk aversion flows," Ramanathan said.
Traders said U.S. jobs figures at 1330 GMT would be crucial
in deciding the direction of the rupee next week as the data
will offer clues on global growth.
One-month offshore non-deliverable forward contracts
were at 48.68.
In the currency futures market, the most-traded
near-month dollar-rupee contracts on the National Stock
Exchange, the MCX-SX and the United Stock Exchange were all
around 49.94, on total volume of $5.1 billion.
