Rupee has best week in a month on growth hopes

The rupee completed the biggest weekly gain in a month on speculation that accelerating economic growth will prompt investors to increase purchases of the nation’s stocks. The currency strengthened to the highest level in two weeks as funds based abroad raised holdings of Indian shares to a record and the government reported the fastest pace of expansion in the second quarter since 2007.


The approaching September 15 deadline for corporate tax payments is probably spurring a bout of dollar sales, supporting the rupee, said Sudarshan Bhatt at Corporation Bank. “The stronger growth and the surge in shares this week are helping the rupee,” said Mr Bhatt, the Mumbai-based chief foreign-exchange trader at the bank. The rupee appreciated 0.5% from a week ago to 46.64 per dollar as of the 5 pm close in Mumbai, according to data compiled by Bloomberg.

Overseas investors raised holdings of Indian equities to an all-time high of $85.8 billion as of September 1, data from the Securities & Exchange Board of India show. The Bombay Stock Exchange’s Sensitive Index advanced 1.2% this week. India’s gross domestic product grew 8.8% in the three months through June from a year earlier, after an 8.6% increase in the previous quarter, the Central Statistical Organisation said on August 31. Local companies pay tax in quarterly portions in June, September, December and March.

Offshore forward contracts indicate the rupee will trade at 47.29 to the dollar in three months, compared with expectations for 47.58 at the end of last week.

Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.(From ET)




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