Rupee gains for fifth day on dollar sell-off

Sep 12 2013, 01:14 IST
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SummaryThe rupee rose to a three-week high on Wednesday, extending gains for a fifth session, with companies selling the dollar as the Indian currency continued its recovery.

The rupee rose to a three-week high on Wednesday, extending gains for a fifth session, with companies selling the dollar as the Indian currency continued its recovery.

The rupee's sharp recovery has been aided by the easing of geopolitical concerns, with an attack on Syria appearing less imminent, and the announcement of a series of steps to attract inflows by the new central bank governor, Raghuram Rajan.

Dealers cited large dollar inflows from a private petrochemical company as well as some likely dollar selling related to Mylan's $1.6-billion deal to acquire a unit of Strides Arcolab.

Foreign institutional investors (FIIs) bought $421.15 million worth of shares on Tuesday, bringing their total to nearly $800 million over the previous four sessions.

"The panic dollar buying has reduced. Those who were sitting on the sidelines hoping for further falls in the currency have started selling. I expect the rupee to recover to 61 to the dollar," said Satyajit Kanjilal, chief executive at ForexServe.

The partially convertible rupee closed at 63.365 per dollar. It rose to 63.0575 in session, its best level since August 19.

The rupee has now recovered 5.8% over the last five sessions, its longest winning streak in a year, since Raghuram Rajan took over as the central bank chief on September 4 and unveiled a raft of steps, including allowing banks to borrow more overseas and offering a concessional swap facility to banks to raise deposits from overseas Indians.

Bonds gain for second day on Rs stability

Indian government bond yields held in a tight range on Wednesday as the recent drop in global crude oil prices and gains in the rupee cheered sentiment, but upcoming data and key policy decisions kept a lid on further gains.

Traders expect market participants to remain guarded as there could be further volatility with the US Federal Reserve and the Reserve Bank of India expected to announce policy decisions next week.

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