The Indian rupee strengthened on Monday, pulling away from three-week lows hit on concerns about the Dubai debt crisis, as stronger Asiancurrencies and shares shares raised expectations of fund flows into the local market. At 10:15 a.m. (0445 GMT), the partially convertible rupee was at 46.39/40 per dollar, 0.5 per cent stronger than its close of 46.64/65 on Friday. "The rupee has rallied due to the global equities recovery and tracking weakness in the dollar index," the chief dealer with a large private sector bank said, predicting a range of 46.25-46.45 during the session. The index of the dollar against six majors was down 0.6 per cent. Most Asian currencies were stronger compared to the dollar. The dollar edged down against other major currencies on Monday, pausing from sharp gains made last week after the United Arab Emirates offered emergency assistance to banks in Dubai, soothing the market fears about a looming debt default. Indian shares opened up 0.65 per cent and quickly extended gains to more than 1.5 per cent. Market sentiment improved after many companies said they had only limited exposure to Dubai and on the rise in Asian stocks rose on hopes fallout from any debt default would be limited. Foreign portfolio buying of about more than $15 billion of stocks this year has helped the rupee rise about 12.5 per cent from a record low of 52.2 in early March. Dubai's debt crisis would not affect India much, but the government is keeping a close watch and will act to prevent any fallout, Finance Minister Pranab Mukherjee said on Saturday. One-month offshore non-deliverable forward contracts were quoting at 46.36/46, little changed from the onshore spot rate.
SUDEEP SINGH
PGDM III SEM
SEC-B
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