The rupee extended gains against the dollar on Tuesday, rising for a sixth consecutive trading session, as the greenback fell against major rivals amid persistent concerns about the impact of QE2, Europe’s debt crisis and China’s efforts to cool its economy.
At 11:55 AM (IST), the partially convertible Indian currency was at 44.83 per dollar, stronger than the previous close of 44.95/96. The rupee touched 44.7950 yesterday, its strongest level since Nov. 12.
Last week, the rupee had gained 1.6%, its best weekly gain in two months.
But, some currency dealers were of the view that importers would come in to buy dollars around 44.80. Crude oil, India's biggest import, is hovering near the US$89 per barrel mark. Refiners are the largest buyers of dollars in India.
The BSE Sensex was down 0.6% at 19,863 after being as low as 19,859 as investors chose to stay on the sidelines due to global economic concerns and mixed Asian markets.
Foreign funds have pumped in US$638mn into Indian shares over the last week, according to the latest SEBI data, taking the net investments to a record US$29.3bn in 2010.
The dollar fell to a three-week low against the yen today, dropping below its 55-day moving average of 82.53 yen. Asian currencies were trading mixed versus the dollar.
The dollar fell versus 11 of its 16 major counterparts amid speculation that the Federal Reserve will buy more bonds beyond US$600bn to keep the economy from slipping back into a recession.
Fed policy makers meet next week to review their plan to buy Treasuries through June and expand record stimulus in a bid to reduce 9.8% unemployment and keep inflation from slowing.
The Dollar Index, which tracks the greenback against the currencies of six major trading partners, fell 0.3% to 79.45.
Finance ministers from the 27 European Union (EU) countries are set to give formal approval today to an Irish aid package announced on Nov. 28. European finance ministers will also discuss Portugal’s outlook amid concern it will need aid.
Asian stocks fell today as the China Securities Journal reported that the period around this weekend may be a “window” for China to raise interest rates.
The yen rose to 82.35 per dollar as of 12:41 p.m. in Tokyo from 82.66 in New York yesterday. It earlier touched 82.34 per dollar, the strongest since Nov. 12. The yen was at 109.90 per euro from 110.
The dollar fell to US$1.3347 per euro from US$1.3308 yesterday, when it touched US$1.3442, the lowest since Nov. 23.
The Nikkei 225 Stock Average fell 0.3% to 10,131 and the Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, dropped 0.2% at 2,850 after being as low as 2,809.
China’s central bank may raise rates around the time set for the release of November’s inflation data, which has been scheduled for Dec. 13, the China Securities Journal said today.
Separately, Reserve Bank of Australia Governor Glenn Stevens and his board left the overnight cash rate target at 4.75% today as Australia’s growth slows and risks to the global economic recovery persist.
Australia’s currency traded at 99.03 US cents from 98.99 cents, after dropping 0.3% yesterday. It fell to 81.55 yen from 81.82 yen.
