IND: Rupee hits new 4-month high as dollar weakens
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.
At 11:15 a.m. (IST), the partially-convertible Indian currency was trading at 45.50/51 per dollar after touching a low of 45.59/60 and a 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. The NSE Nifty too rose to the highest level since Jan. 17, 2008.
Meanwhile, the dollar extended its decline against most rival currencies in Asian trading while gold was hovering near a record high after the Fed said it stands ready to provide additional stimulus to bolster the US economy.
Separately, crude oil futures were trading steady near the US$75 per barrel mark after an industry report showed an increase in US stockpiles and refineries operated at their lowest rate in five months.
Copper, zinc, nickel and lead futures climbed for the first time in three sessions as a weaker dollar bolstered the appeal of these commodities.
The greenback fell against 13 of its 16 major counterparts after Fed policy makers said at a meeting yesterday they will provide additional accommodation to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.
