Rupee shoots up 130 paise on political stability, capital inflows

Mirroring the frenzy in the stock markets, the Indian rupee on Monday appreciated by a whopping 130 paise to trade at 48.10 against the US dollar as the capital inflows increased after a clear verdict in the general elections.     

The domestic currency opened with a big gap of 92 paise at 48.48/52 a dollar from its previous close of 49.40/42 and later appreciated to 48.10 during trading at noon.     

The Interbank Foreign Exchange (forex) market witnessed fairly active trade this morning as the stock markets hit the upper-most circuit filter with the NSE index breaching 20 per cent, forcing the authorities to suspend trading for the day.     

The clear mandate given to the UPA would encourage foreign investors, which would lead to increased capital inflows in the country due to lower risk of political instability, a forex dealer said.     

The dealers also see the rupee strengthening to a level of 46 against the US dollar in the short term within a month from now. The infrastructure sector, the dealers, said could attract substantial foreign funds with the government in all likelihood will push economic reforms in this as well as other areas.