The Indian rupee gained on Thursday tracking a rally in domestic shares on hopes the country would retain its appeal to foreign investors, despite uncertainty about the outlook for US interest rates that hit other emerging markets. The US Federal Reserve on Wednesday renewed its pledge to keep interest rates near zero for a "considerable time," but also indicated it could raise borrowing costs faster than expected when it starts moving.
Although emerging Asian currencies were hit, the rupee gained as Indian shares rose nearly 2 percent on speculation of strong foreign buying due to improving domestic fundamentals. "The turnaround in the stock market during the course of the day on back of various rumours changed the outlook for the pair," said Naveen Raghuvanshi, a foreign exchange dealer with DCB Bank in Mumbai.
The partially convertible rupee ended at 60.83/84 per dollar, compared to its close of 60.92/93 on Wednesday. The rupee's modest gain stood out against the 0.27 to 0.81 percent fall in the Indonesian rupiah, Korean won, Malaysian ringgit and the Philippine peso. In the offshore non-deliverable forwards, the one-month contract was at 61.17/22 while the three-month contract was at 61.76/86.