Business | Markets

Rupee closes week on a high

The Indian currency was helped by rally in the stock market, ending at 49.44/46 per dollar

  • Reuters
  • Published: 00:00 November 1, 2008
  • Gulf News

Mumbai: The Indian rupee strengthened to its highest in a week yesterday helped by a rally in the stock market, which raised hopes of some fresh capital inflows, but month-end dollar demand from oil refiners limited further gains.

The rupee ended at 49.44/46 per dollar, its strongest since October 22, and 0.5 per cent above Wednesday's close. The market was shut on Thursday for a local holiday.

The partially convertible currency has been battered by foreign outflows from the tumbling stock market in recent months but has pulled back from a record low of 50.29 set on Monday.

Dealers said it was helped yesterday by soaring call money rates, which jumped to a three-week high of 21 per cent making it attractive for banks to hold and lend rupees and expensive for anyone borrowing to short the currency. "The stocks rallied and overnight rates were at 20 per cent so banks were unwinding long dollar positions as it is very costly to hold long dollar with overnight premia around 5 paise," a senior dealer with a private bank said.

Still, the rupee has shed 5 per cent in October to take its losses in 2008 to 20.3 per cent. India's main share index rose 8.2 per cent to its highest close in more than a week as investors bet on a possible rate cut. But it still posted its biggest monthly fall in at least 16 years after fears of a sharp global economic slowdown triggered a flight from risky assets.

The overnight cash rate, a barometer of cash supplies in the interbank market, closed at 17.00/17.50 per cent.

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