The Indian rupee strengthened to its highest level in two-and-a-half months on Friday, gaining for a second straight week, as the government's decision to partially deregulate diesel and a broad risk-on sentiment globally boosted the currency. Traders said a broad risk-on mood following strong data in the world's two biggest economies also cheered the rupee.
World shares hit a 20-month high as encouraging data from the United States and China boosted prospects for the global economy, while the yen hit new lows ahead of next week's Bank of Japan meeting. "The mood swing has happened for the better and we see the sellers (rupee) in a state of panic. However, some buyers are not letting the opportunity go and buying for the very near term," said Satyajit Kanjilal, chief executive at Forexserve, a forex and fixed income consultancy firm.
The partially convertible rupee closed at 53.71/72 per dollar. The unit had closed at 54.3850/3950 on Thursday. The unit rose for a second straight week, gaining 1.9 percent, its biggest weekly gain in four months. In the onshore forwards, the six-month premium rose to 185.75 points from 182.5, while the one-year premium rose to 338.25 points from 333.75 on Thursday.
In the offshore non-deliverable forwards, the one-month contract was at 53.95, while the three-month was at 54.52. 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 all closed at around 53.86 with a total traded volume of $7.44 billion.
