The Indian rupee climbed to its highest in nearly two weeks on Tuesday, as expectations of a US rate cut raised hopes of greater capital inflows into Asia's third-largest economy. The partially convertible rupee ended at 39.42/43 per dollar - its highest since November 22, and up nearly 0.2 percent from the previous close of 39.49/50. It hit a near-decade high of 39.16 last month.
"The RBI (central bank) was buying dollars at 39.41/42, which shows they would be glad if the rupee does not climb beyond the 39.40 mark, at least for the time being," a trader with a foreign bank said. The Reserve Bank of India has bought about $52 billion in the first 9 months of 2007 and is widely believed to have played an active role in the currency market in October and November.
But traders expect robust inflows into the economy, which grew 9.4 percent in the fiscal year 2006/07, to help the local currency gain in the coming months. Foreigners have bought a net $16.2 billion of local stocks so far in 2007. Traders await a rate decision from the US Federal Reserve next week for cues on fund flows.
Fed Chairman Ben Bernanke said that last week resurgence in financial market strains in recent weeks has dimmed the outlook for the US economy. The Fed's next rate-setting meeting is on December 11.
Comments
Comments are closed.