Rupee nears 20-month high against dollar

By siliconindia   |   Monday, 26 March 2007, 05:00 Hrs
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Mumbai: After resuming strong, the rupee rallied sharply to near 20-month high of 43.4150/4250 against US dollar in late morning deals today, following sharp rise in forward dollar premia. In active trade at the Interbank Foreign Exchange (forex) market, the Indian unit opened higher at Rs 43.51/52 a dollar from Friday?s close of Rs 43.57/58 per dollar and improved further to Rs 43.4150/4250 a dollar in late morning deals, up by a whopping 15.50 paise. Previously, the rupee had closed at 43.4150/4225 on 1 August 2005. A fresh slight cash crunch in the system compelled traders to sell dollars to generate funds, forex dealers said. Sustained Foreign Institutional Investors (FIIs) inflows in equity markets also gave support to the currency. The rupee sentiment was so strong that rising global crude oil prices near USD 63 a barrel could not able to stem the surge in domestic unit, reported a business daily. Earlier, the rupee rose on speculation investors abroad will increase purchases of stocks. ?Confidence of overseas investors on India has not withered by the recent volatility because of strong fundamentals,? said Parthasarathi Mukherjee, treasurer of UTI Bank in Mumbai. ?That?s why flows continue to remain strong.? Investors abroad bought $1.3 billion (Rs5,652 crore) more of Indian stocks than they sold this year through 22 March, according to the Securities & Exchange Board of India. They bought $8 billion of equities in 2006 and a record $10.7 billion in 2005. The Bombay Stock Exchange?s benchmark sensex jumped 6.9 percent last week, the most in 11 months. The country expects its economy to grow 9.2 percent in the year ending 31 March. It is aiming for 10 percent growth in the next two to three years.

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