MUMBAI: The Indian rupee rose on Friday as foreign funds continued to sell dollars to invest in domestic shares, aided by a risk-on sentiment as a survey showing brisk US manufacturing activity helped lift Asian stocks.
Foreign funds have been net buyers of $330 million over the past seven sessions to Thursday as emerging market assets have remained stable despite some recent weak data out of the United States, which has largely been discounted as due to severe cold weather.
Some dealers have also cited corporate flows related to GlaxoSmithKline Plc's roughly $1 billion offer to raise its stake in its Indian pharmaceutical unit.
The offer opened on Tuesday and closes on March 5. Indian shares rose for a fifth time in six sessions on Friday as a recovery in global markets allowed blue chips such as ITC Ltd to recover from falls in the previous session, while cement makers such as ACC Ltd surged on speculation over price hikes.
US manufacturing activity accelerated in February at its fastest pace in nearly four years due in part to growth in new orders, an industry report showed on Thursday.
"Sustained foreign capital inflows, coupled with a recovery in the equity market mainly boosted the rupee against the dollar. The rupee needs to break the 61.95 level for further appreciation, else it will be trading in the 62.05-62.80 band for the coming week," said Aanand Patankar, an options trader with SAK Forex Market Pvt Ltd.
The partially convertible rupee closed at 62.12/13 per dollar compared with 62.26/27 on Thursday.
The rupee, however, fell 0.3 percent for the week, which saw Finance Minister Palaniappan Chidambaram saying the government would stick to its fiscal deficit target, while giving tax sops to certain sectors, during his presentation of the interim budget before general elections. In the offshore non-deliverable forwards, the one-month contract was at 62.43, while the three-month was at 63.28.
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