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Rediff.com  » Business » Rupee sees biggest one-day gain in seven weeks

Rupee sees biggest one-day gain in seven weeks

Last updated on: November 18, 2013 17:54 IST

RupeeThe rupee notched up its biggest single-day gain in nearly seven weeks on Monday, buoyed by hopes strong foreign fund flows would support local markets as global risk assets got a boost from China's ambitious economic reforms agenda and monetary stimulus in the United States looked set to continue.

The BSE Sensex rose more than 2 per cent, its biggest single-day gain in more than a month.

The gains will provide a much-needed reprieve after the rupee fell for a fifth week and hit an over two-month low last week in trade.

Subsequent comments from Federal Reserve Chairman-elect Janet Yellen led to hopes that the US was in no rush to scale back stimulus, reinforcing market speculation that any move was more likely in March than December.

"The rupee was helped by the gains in the euro and the reversal of NDF trades. I think sentiment will remain rupee positive as long as 64 is not breached on the downside," said Navin Raghuvanshi, vice president at Development Credit Bank, referring to non-deliverable forward trades.

Despite Monday's gains, the rupee will continue to remain underpinned by domestic macroeconomic concerns as wholesale prices rose at their fastest pace in eight months while retail inflation hovered over double digits.

Policy markers have sought to downplay concerns about the economy with Finance Minister Palaniappan Chidambaram reiterating that the government will not breach its 4.8 per cent fiscal deficit aim for 2013/14 and pointing to lower estimates of the current account deficit.

The partially convertible rupee closed at 62.41/42 per dollar, compared with 63.11/12 on Thursday.

It gained 1.1 per cent, its biggest single-day gain since October 3.

It rose to 62.38 in session, its highest since November 7.

Indian markets were closed on Friday for a local holiday.

In the offshore non-deliverable forwards, the one-month contract was at 63.07, while the three-month was at 64.19.

Subhadip Sircar in Mumbai
Source:
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