Rupee pulls off a hat-trick as stocks gain

Indian rupee rose for a third consecutive session on Friday amid optimism that strong economic growth and a rising local stock market will continue to attract overseas capital inflows. Other Asian currencies, barring the yen, gained against the dollar amid growing risk tolerance. But, the euro edged slightly lower against the dollar ahead of the announcement of the stress test results for 90-odd European banks. The partially convertible rupee ended at Rs46.9450 per dollar, after touching an intraday high of Rs46.8950. It had closed at Rs47.1250/1350 on Thursday. It touched Rs47.3850 on July 20, the weakest level since June 7.



Compared to last Friday's close of Rs46.77/78, the rupee was down about 0.4%. The BSE Sensex and the NSE Nifty gained about 1% on the week with both the key indices touching new intermediate highs before easing a little. Today both the indexes closed marginally higher. The index of the dollar against six major currencies was at 82.67 versus 82.63 on Thursday. The euro was marginally down at US$1.2848 after earlier gaining as Germany’s Ifo institute said its business climate index jumped to 106.2, the highest level since July 2007. Economists expected a decline.

The euro had rallied on Thursday on strong euro-zone economic reports and better-than-expected US corporate earnings. The pound jumped after a report showed the UK economy grew almost twice as much as analysts forecast. The British pound rose to US$1.5388 from US$1.5278. The euro fell against the pound. Hungary’s forint snapped a three-day gain as Moody’s Investors Service said it may reduce the nation’s credit rating and Standard & Poor's scaled down its outlook on Hungary to negative from stable.

Coming back to the rupee, a private survey says that the Indian unit is forecasters' top bet for appreciation among BRIC currencies. Separately, Morgan Stanley said that it is poised to turn outright bearish on the Indian Rupee on signs that the economy is slowing and as a technical chart signaled that the currency may weaken. "The rupee’s economic fundamentals are deteriorating as growth slows, the balance of payments declines and because monetary policy may not be sufficient to temper inflation," Morgan Stanley's Hong Kong-based strategists wrote in a report. Offshore forward contracts indicated the rupee will trade at 47.51 to the dollar in three months, compared with expectations for a rate of 47.72 yesterday and 47.35 at the end of last week.