The Indian rupee rose to near a one-week high on Monday, catching up to a global risk rally following improving US jobs data, while a promise from the finance minister to unveil fiscal consolidation steps sparked cautious hope. While the rupee will continue to take cues from global risk sentiment, investors will closely watch how the government tackles needed fiscal measures such as raising diesel prices or attracting foreign investment.
Recently-appointed Finance Minister P. Chidambaram sparked a bit of optimism on Monday after saying he would shortly unveil a path of fiscal consolidation, while undertaking a review of tax provisions. "The market has taken a positive note of Chidambaram's statement. The government has no choice now but to act as it is facing credibility issues," said Subramanian Sharma, director at Greenback Forex.
The partially convertible rupee closed at 55.52/53 per dollar as per the SBI closing rate versus its previous close of 55.75/76. That was its biggest daily percentage rise since July 26. The one-month offshore non-deliverable forward contracts were at 55.82, while the three-month was at 56.48. 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 all closed at around 55.71 with the total traded volume at around $3.7 billion.