Rupee climbs on inflow hopes, higher shares

The rupee strengthened on Friday, helped by gains in local shares and hopes an improvement in global risk sentiment would bolster capital inflows.

Traders said signs that debt-laden Greece has moved closer to averting a default helped investor confidence, but the longer term outlook for the rupee would depend on the annual budget to be presented in parliament next Friday.

At 10:22 am, the rupee was at 49.925/930 to the dollar, 0.7% stronger than its Wednesday's close of 50.28/29. The market was closed on Thursday for a local holiday.

"Expectations of inflows in the stock market with the MCX IPO doing very well is also supporting sentiment for the rupee," said Anil Kumar Bhansali, vice-president at Mecklai Financials.

The Multi-Commodity Exchange of India, which raised Rs 660 crore in an initial public offering, jumped more than 37% on its stock market debut.

The BSE Sensex snapped a three-day fall and rebounded 1.9%, joining a rise across Asian markets.

Traders said the rupee is likely to swing in a wide range, between 49.74 and 50.37, with payments for oil imports a key driver.

"The direction for the rupee will depend on the budget, and also on the global sentiment," a trader with a foreign bank said.

Oil is India's largest import item and refiners are the biggest buyers of dollars in the local forex market. Brent crude rose above $125 a barrel, posting its sixth weekly gain in seven.

Traders will also be wary ahead of the US jobs data due after the local market closes on Friday.

The one-month offshore non-deliverable forward contracts were at 50.36.

In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were all around 50.16, on a total volume of $970 million.