The Indian rupee rose on Friday for a third straight session, helped by capital inflows on optimism that the government will be able to win a vote in parliament and push through key reforms. India's September quarter GDP was largely in-line, but the data showed the economy was on track for its worst year in a decade, raising hopes of some monetary easing from the central bank as early as December.
Dealers, however, stayed focused on a crucial parliament vote next week on allowing foreign entry in multi-brand retail. The vote is non-binding on the government, but any loss will seriously imperil its ability to undertake further reforms. "The parliament vote will be the key. If the government wins, the rupee may rise to 53.70 to the dollar," said Naveen Raghuvanshi, associate vice-president at Development Credit Bank. "If it loses, we may see a sharp fall to 56." The partially convertible rupee ended higher at 54.26/27 against its last close of 54.8350/8450 per dollar.
The rupee snapped four weeks of losses to gain 2.3 percent, its biggest weekly gain since early July. It also clocked a second month of gains, rising 0.9 percent. In the offshore non-deliverable forwards market, the one-month contract was at 54.57, while the three-month was at 55.11. In the currency futures market, the most-traded near-term dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed at around 54.60 with a total traded volume at around $5.3 billion.