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- dEsPeraTe cRaNky -
The Indian rupee rose to its strongest level in a week on Friday boosted by a rise in global risk appetite after a string of strong data and expectations of bullish bank stress test results in Europe.
The partially convertible rupee closed at 46.94/95 per dollar, after rising as high as 46.8925, its strongest since July 16, and 0.4 percent stronger than Thursday's close of 47.1250/1350. The unit still ended down 0.3 percent on the week.
"The rupee gained quite a bit today as all are expecting good stress test results," said Ashtosh Raina, head of foreign exchange trading at HDFC Bank in Mumbai.
"The rupee's open on Monday would depend mainly on the test results, but the INR should hold in a broad range of 46.80 - 47.50 next week," he added.
In an effort to calm investors' over the potential impact of the euro zone debt crisis on Europe's banking system, regulators are assessing how 91 banks across Europe would cope with another economic downturn, and the results are expected to be published around 1600 GMT on Friday.
Dealers said the dollar's losses against major currencies also helped the rupee. The index of the dollar .DXY against six major currencies was down 0.2 percent.
Strong economic data boosted the euro on Friday when the German Ifo index came in above forecasts, but analysts said there were downside risks for the currency, even if the bank stress test results were benign.
Gains in domestic shares also helped the rupee. Shares are closely monitored for cues on direction of capital flows which have a huge influence on the rupee's fortunes.
So far this year, foreigners have bought a net $8.8 billion worth of local shares. Last year's record $17.5 billion inflow had helped the rupee gain 4.7 percent on year.
Indian shares logged third straight weekly gain and touched a 29-month high on Friday, as robust U.S. earnings sent the regional markets higher, but closed off highs on caution ahead of European banks' stress test results.
"USD-INR has been driven higher by local flows; importer buying and lack of exporter hedging. The speculative market is now substantially long USD-INR on the back of this. Broad USD weakness and news the RBI is relaxing ECB rules should trigger an INR rebound," Standard Chartered economists said in a note.
India's central bank said on Thursday, it will allow take-out financing through external commercial borrowing for refinancing of rupee loans availed from domestic banks.
One-month offshore non-deliverable forward contracts PNDF were quoted at 47.15, weaker than the onshore spot rate.
In the currency futures market INRFUTURES, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX closed at 46.9650 and 46.97 respectively, with the total traded volume on the two exchanges at about $5.4 billion.
The partially convertible rupee closed at 46.94/95 per dollar, after rising as high as 46.8925, its strongest since July 16, and 0.4 percent stronger than Thursday's close of 47.1250/1350. The unit still ended down 0.3 percent on the week.
"The rupee gained quite a bit today as all are expecting good stress test results," said Ashtosh Raina, head of foreign exchange trading at HDFC Bank in Mumbai.
"The rupee's open on Monday would depend mainly on the test results, but the INR should hold in a broad range of 46.80 - 47.50 next week," he added.
In an effort to calm investors' over the potential impact of the euro zone debt crisis on Europe's banking system, regulators are assessing how 91 banks across Europe would cope with another economic downturn, and the results are expected to be published around 1600 GMT on Friday.
Dealers said the dollar's losses against major currencies also helped the rupee. The index of the dollar .DXY against six major currencies was down 0.2 percent.
Strong economic data boosted the euro on Friday when the German Ifo index came in above forecasts, but analysts said there were downside risks for the currency, even if the bank stress test results were benign.
Gains in domestic shares also helped the rupee. Shares are closely monitored for cues on direction of capital flows which have a huge influence on the rupee's fortunes.
So far this year, foreigners have bought a net $8.8 billion worth of local shares. Last year's record $17.5 billion inflow had helped the rupee gain 4.7 percent on year.
Indian shares logged third straight weekly gain and touched a 29-month high on Friday, as robust U.S. earnings sent the regional markets higher, but closed off highs on caution ahead of European banks' stress test results.
"USD-INR has been driven higher by local flows; importer buying and lack of exporter hedging. The speculative market is now substantially long USD-INR on the back of this. Broad USD weakness and news the RBI is relaxing ECB rules should trigger an INR rebound," Standard Chartered economists said in a note.
India's central bank said on Thursday, it will allow take-out financing through external commercial borrowing for refinancing of rupee loans availed from domestic banks.
One-month offshore non-deliverable forward contracts PNDF were quoted at 47.15, weaker than the onshore spot rate.
In the currency futures market INRFUTURES, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX closed at 46.9650 and 46.97 respectively, with the total traded volume on the two exchanges at about $5.4 billion.
