Mumbai, Oct 5 (IANS) Lessened chances of a US rate hike and subsequent weakness in the dollar value buoyed the Indian rupee to close at a seven-week high of 65.28 on Monday.
The rupee last breached the 65.27-28 level on August 19. The Indian currency gained for five consecutive sessions to strengthen by 23 paise on Monday.
The rupee had previously closed at 66.51 to a US dollar on October 1. It had gained 7 paise on October 1 to close at 65.51 from its previous close of 65.58 against a greenback.
The rupee’s rise is concurrent to the expectations that the US Fed will not raise interest rates in its Federal Open Market Committee meet scheduled for October 27-28, due to slowdown in jobs creation.
Last month, the US economy added just 142,000 jobs from 173,000 jobs created in August. The August figures are being revised downwards.
The jobs data is expected to deter the US Fed from raising rates. These were last raised rates in 2006.
With higher interest rates in the US, the Foreign Portfolio Investors (FPIs) are expected to be led away from emerging markets such as India.
Furthermore, foreign funds flow to the Indian markets grew on Monday. The FPIs were net buyers of stocks worth Rs.649.9 crore in the Indian equity markets.
The Indian equity markets too continued their upward trajectory with both bellwether indices gaining around 2.15 percent each in the day’s trade.
The barometer 30-scrip sensitive index (S&P Sensex) of the Bombay Stock Exchange (BSE) was up 564.60 points or 2.15 percent.
The wider 50-scrip Nifty of the National Stock Exchange (NSE) closed 168.40 points or 2.12 percent higher at 8,119.30 points.
Last week’s Reserve Bank of India (RBI) decision to cut interest rates and ease access to government backed securities for foreign funds also supported the sentiment. The RBI’s moves are expected to usher in around $2.5 billion by this fiscal end.
According to Hemal Doshi, chief currency strategist, Geofin Comtrade, the rupee might weaken in the near term due to profit bookings.
“Depreciation is expected on the back of profit taking in near term. The rupee can move towards 65.50-65.60,” Doshi told IANS.