Rupee registers biggest weekly gain since May

Riding high on hope that demand for emerging-market assets will sustained amid the prospect of future euro-area stimulus, Indian currency touches 62.33

The rupee recorded its biggest weekly gain since May last year, closing at 62.33 a dollar, riding high on the hope that demand for emerging-market assets will be sustained amid the prospect of future euro-area stimulus.

Opening at 62.49 a dollar, it touched a high of 62.28. It had previously closed at 62.67 a dollar.

European Central Bank President Mario Draghi said this week that policy-makers could undertake measures, including buying sovereign bonds, to spur growth. Minutes of the US Federal Reserve’s December meeting, released on Thursday, showed the US might not raise interest rates before late April.

“The rupee strengthened for the third straight session on Friday on continued dollar selling by exporters and banks. Firm equity markets also supported sentiments as investors hope that foreigners continue to buy in the domestic debt and equity markets,” said Suresh Nair, director, Admisi Forex.

The rupee has climbed 1.6 per cent from January 2, the biggest weekly gain since May 16.

The currency rose 0.6 per cent on Friday and is Asia’s best performer this week.

“Strong inflows continue to lend support to the rupee,” said Paresh Nayar, head of currency and money markets at FirstRand. “India looks relatively attractive when you see other major world economies slowing.”

The Reserve Bank of India forecasts the $ 1.9 trillion economy, Asia’s third largest, to grow 5.5 per cent in the year ending March, compared with 4.7 per cent last year.

Tracking gains in the rupee, bond yields, however, fell on Friday.

The yield on the 10-year benchmark bond fell three basis points to end at 7.84 per cent, close to its lowest level since December 15, when it had ended at 7.83 per cent.