The Indian rupee surged to its highest level in more than a month on Tuesday on the back of a sharp rally in shares, dollar sales by exporters and foreign inflows into government debt. The market also appeared to take comfort from a reiteration by the Finance Ministry of Moodys' decision in December to upgrade the short-term ceiling on Indian foreign currency bank deposits to P-3 from NP.
The rupee closed at 51.70/71 to the dollar, its strongest since December 8, and 1.5 percent higher than Monday's close of 52.50/51. It was the currency's biggest intraday gain since December 16. One-month offshore non-deliverable forward contracts were quoted at 52.02, indicating some weakness in the short-term in the onshore spot rate. In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were all around 51.95 on total volume of $6.1 billion.
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