Business | Markets
Indian rupee strengthens as capital inflows rise
India's rupee strengthened on speculation international investors will quicken purchases of the nation's assets as inflation slows
- Bloomberg
- Published: 00:00 January 24, 2012
Mumbai: India's rupee strengthened on speculation international investors will quicken purchases of the nation's assets as inflation slows.
Foreign funds boosted holdings of Indian debt by $3.2 billion (Dh11.74 billion) this month to $29.3 billion as of January 19, exchange data show, and investments in stocks rose by $1.2 billion. Inflation slowed to 7.47 per cent in December from 9.11 per cent the previous month, government data show. The rupee's gains may be limited as importers buy dollars to meet month-end payments, according to Alpari Financial Services.
"We could see a tussle between dollar demand from the oil importers and foreign investors buying in the debt market, resulting in volatile movement in the rupee," Pramit Brahmbhatt, chief executive officer at Alpari's Indian unit in Mumbai, wrote in an e-mail yesterday.
The rupee advanced 0.5 per cent to 50.0825 per dollar in Mumbai, according to data compiled by Bloomberg. It strengthened 2.4 per cent last week, the most since the five-day period ended October 28. The Reserve Bank of India will keep its benchmark rate unchanged at 8.50 per cent at a policy review today, according to economists.
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