Rupee Breaks Longest Losing Streak Since 2007 as Stocks Rallyby
India’s S&P BSE Sensex index of shares surges 2.3 percent
Gains in equities helping improve rupee sentiment: FirstRand
India’s rupee climbed the most in more than two months as local stocks rallied and amid optimism strong monsoon rains will help boost crop output and growth in Asia’s third-largest economy.
The currency rose for the first time in 10 days as the S&P BSE Sensex index of shares rallied 2.3 percent, tracking gains in global equities. India is set for the highest monsoon rainfall since 1994 as the odds of a La Nina increase, Skymet Weather Services Pvt., a New Delhi-based private forecaster, said on its website on Tuesday. The June-September seasonal showers affect both summer and winter crop sowing in India, and water more than half of all farmland.
The rupee strengthened 0.6 percent, the most since March 17, to 67.3350 a dollar in Mumbai, prices from local banks compiled by Bloomberg show. It lost 1.8 percent in the last nine days, the longest losing run since November 2007. The currency is Asia’s worst performer this year, with a 1.8 percent decline.
“Equity markets are positive and that’s the reason the sentiment is better for the rupee,’’ said Paresh Nayar, Mumbai-based head of currency and money markets at the local unit of South African lender FirstRand Ltd. “The currency’s performance will rely on local monsoon rains and the trajectory of U.S. interest rates.”
After swinging around since the release of the Federal Reserve’s April meeting minutes last week, Asian markets seem to have grown comfortable with the prospect of higher U.S. rates. Regional equities advanced even as American data on Tuesday showed purchases of new homes surged in April to the highest since the start of 2008 and traders are now pricing in a better-than-even chance of a boost to borrowing costs in July.
Indian sovereign bonds were steady, with the yield on notes due January 2026 at 7.46 percent, prices from the Reserve Bank of India’s trading system show.