Return to risk lifts rupee to 2-month high versus dollar

The rupee hit a two-month high against the dollar on Monday, as rising risk appetite made foreign institutional investors buy equities.

There were also some foreign direct investment inflows and the euro’s gain against the greenback helped matters, experts said.

The local currency ended at Rs44.43 per dollar compared with Friday’s Rs44.59.

“The rupee is being propelled by three major reasons: one, there was some big corporate inflows; secondly, Monday is a holiday in New York so the market was thin; and, thirdly, some resolution to the Greece crisis has been positive for the emerging markets,” said Mohan Shenoy, group treasury head, Kotak Mahindra Bank.

“But we believe we are at the lower end of the range. We expect the rupee may hover around 44-45.50 over the next month or two,” he said.

Sandeep Gonsalves, foreign exchange consultant/dealer with Mecklai & Mecklai said there were rumours about possible inflows from a telecom company and foreign institutional investments closing which pushed the rupee higher.

“Also, there was no cash demand on Monday. But public sector oil companies have capped the rise in rupee,” he said.

Abhishek Goenka, CEO, India Forex Advisors, said the main push for the rupee has come from $1 billion of inflows in the last couple of days.