Rupee vaults to an 11-month high of 58.595 a dollar

news
19 May 2014

The rupee shot up to a 11-month high of 58.595 against the dollar - its highest since June 2013 - as foreign institutional investors continued to pour dollars into the local debt and equity markets.

The Indian currency touched an intra-day high of 58.375 earlier in the day before closing at 58.595 a dollar, up 20 paise, or 0.32 per cent, from Friday's close of 58.7825 a dollar.

However, dollar buying by the central bank capped broader gains, and traders expect the Reserve Bank of India to continue stepping in as it looks to build up its foreign exchange reserves.

On Monday, state-owned banks are reported to have bought dollar on behalf of the RBI, which prevented a sharp rise in the rupee.

India's dollar reserves had surged to a more than two-year high of $313.83 billion during the week ended 9 May, the highest since 11 November 2011.

The rupee gained from rising prices of domestic shares, with the BSE and NSE indexes hitting record closing highs on continued optimism about substantial reforms by the incoming BJP-led government.

Overseas investors bought shares worth a net Rs3,634 crore in local markets on Friday, their biggest single-day purchase since March, provisional data showed.

The rupee has clawed back from its all-time low of 68.85 against the dollar touched on 28 August 2013, and has gained 18 per cent in the wake of rising dollar inflows.

The dollar index, a measure of the US currency's strength against major global currencies, was trading at 79.944, against its previous close of 80.043.

The 30-share S&P BSE Sensex gained 1 per cent to close at 24,363.05 points, while the National Stock Exchange's broader 50-share CNX Nifty index gained 0.84 per cent and closed at 7,263.55 points.

The yield on the benchmark 10-year government bond stood at 8.872 per cent, against its previous close of 8.834 per cent. The inter-bank call money rate stood at 7.25 per cent.





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