Monday July 21, 06:10 PM
Rupee rises as political outlook brightens |
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By Anurag Joshi
MUMBAI (Reuters) - The rupee rose on Monday on growing expectations the government would survive a crunch vote in parliament, which would ease global investors' fears of prolonged political uncertainty.
Traders said buoyant equities also boosted sentiment.
The partially convertible rupee ended at 42.68/69 per dollar, off an intraday high of 42.6675, and about 0.2 percent stronger than its previous close of 42.76/77. It had hit a 15-month low of 43.50 earlier this month.
"It has more to do with sentiment than flows. There is more confidence now the government could survive the vote, and this prompted those long on the dollar in the morning to sell the currency," the trading head of a private bank said.
The parliament began debate on a vote of confidence in the Congress party-led coalition government on Monday after its communist allies ended their support in protest at a civilian nuclear deal with the United States.
The vote, due on Tuesday, is so close that several lawmakers who are ill may be flown or wheeled in from hospital, and others have been granted temporary release from jail. If the government loses, then early elections before the end of this year would be all but certain.
Indian shares rose 1.6 percent on Monday, extending gains to a third straight session, as investors awaited the outcome of the confidence vote.
"The outlook for tomorrow will depend on how the stock markets react," the trader said.
Foreigners have been net sellers of shares worth $6.9 billion so far in 2008, after buying a record $17.4 billion in the previous year.
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