MUMBAI The rupee rose on Friday for a third straight session, helped by capital inflows on optimism that the government will be able to win a vote in parliament and push through key reforms.
India’s September quarter GDP was largely in-line, but the data showed the economy was on track for its worst year in a decade, raising hopes of some monetary easing from the central bank as early as December.
Dealers, however, stayed focused on a crucial parliament vote next week on allowing foreign entry in multi-brand retail. The vote is non-binding on the government, but any loss will seriously imperil its ability to undertake further reforms. “The parliament vote will be the key. If the government wins, the rupee may rise to 53.70 to the dollar,” said Naveen Raghuvanshi, associate vice-president at Development Credit Bank. “If it loses, we may see a sharp fall to 56.”
The partially convertible rupee strengthened 58 paise to close a three-week high of 54.26/27 against its last close of 54.8350/8450 per dollar.
The rupee snapped four weeks of losses to gain 2.3 per cent, its biggest weekly gain since early July. It also clocked a second month of gains, rising 0.9 per cent.
Analysts said the GDP print may not force the central bank to rush into a rate cut in December, but many are looking at a repo cut in the January review. Most expect some liquidity-easing step like a cash reserve ratio cut in December.
