India Rupee Hits 8-month High; Sees Best qtr since Sept 2012
March 29, 2014 3:16 PM EST
The Indian rupee posted its biggest quarterly gain since the September quarter of 2012 as heavy foreign buying of equities and debt boosted the local unit, but further gains could be capped by a cautious central bank, analysts warned.
An employee poses with the bundles of Indian rupee notes inside a bank. Photo by: Reuters
The rupee also breached the 60-per-dollar mark for the first time in eight months, prompting the central bank to put up some stiff resistance.
Foreign funds have purchased a net $3.7 billion in equities from the start of 2014 until March 27 while in debt the net inflows stand at $5.8 billion.
Dealers said the central bank was seen buying dollars intermittently over the week to slow the rupee's slide as also to shore up its foreign exchange reserves which have risen to $298.64 billion as on March 21, its highest since December 2011.
Some traders speculated the central bank has likely bought nearly $2-$3 billion over this week in its attempt to slow the rupee's rally.
"There have been good inflows seen in the market. The near-term outlook depends on the central bank's monetary policy but there is good support for the dollar at 59.80 levels," said A. Ajith Kumar, a senior foreign exchange trader at Federal Bank.
The partially convertible rupee closed at 59.91/92 per dollar compared to 60.31/32 on Thursday. The rupee rose as high as 59.68, its strongest since July 30.
The rupee rose 3.15 percent in the March quarter, its best quarter since the 4.96 percent rise in the September quarter of 2012. On the month, the unit gained 3.1 percent, its best month since September 2013.
Traders will continue to monitor foreign fund flows in the near-term for cues. Indian shares hit a record high for a fifth straight session as state-run lenders such as State Bank of India continued their recent rally after the central bank extended the deadline for implementing Basel III capital-raising rules.
The one-year onshore forward premium rose to 519 points, not far from its record high of 525.25 points as the central bank likely conducted sell buy swaps in the forwards, dealers said.
Gains in other Asian currencies also supported sentiment. Most emerging Asian currencies advanced on Friday, heading for weekly gains as speculation grew over China's economic stimulus and the yuan's rebound.
In the offshore non-deliverable forwards, the one-month contract was at 60.22 while the three-month was at 60.88.
FACTORS TO WATCH * Euro drops to 3-wk low on ECB easing talk; kiwi strong * EM stocks regain poise after tough start to year * Spanish CPI shock flags euro deflation risks * Foreign institutional investor flows * For data on currency futures
Most Popular Slideshows
- NFL MNF: Pittsburgh Steelers 30, Houston Texans 23 [PHOTOS]
- 2014 MLB World Series Game 1: San Francisco Giants 7, Kansas City Royals 1 [PHOTOS]
- 2014 MLB World Series - Game 2: Kansas City Royals 7, San Francisco Giants 2 [PHOTOS]
- NFL Thursday Recap - Denver Broncos 35, San Diego Chargers 21: Peyton Manning Has 3 TDs In Easy Win [PHOTOS]
Join the Conversation
- Economic Growth In US And Sub-Saharan Africa Allay 2015 Recession Fears
- Travel Alert: Over 200 Canadians Infected with Mosquito-Borne Chikungunya Virus
- Canadian Ebola Drug: Tekmira Firm Starts Limited Manufacturing of Vaccine, Available By December; Shares Up
- US Dedicates 5 Airports for Travellers From Ebola-Stricken Nations, Lawmakers Want Travel Ban
- WHO Races to Release Ebola Serum in 2 Weeks, Vaccines in January
- Xiaomi Redmi 1S vs. Sharp Aquos Crystal – Specifications, Features And Price Showdown
- ASUS Releases A Teaser Indicating The Arrival of New Zenfone and ZenWatch On October 28
- Boy Stoned To Death For Alleged Rape, Victim Receives Dowry From Militants
- Three Dual SIM Samsung Galaxy Note 4 Duos Variants Comes To China
- Russia is Creating Underwater Combat Robots to Protect its Arctic Territories
- ‘Lone Wolf’ Attack on Canada Parliament Hill Could be ISIS-Related
- Android Lollipop 5.0 Confirmed for Nov 3 Rollout as Nexus 6 Global Release Date is Delayed – Reports