* USD/INR closes at 54.8350/8450 versus 55.45/46 Tuesday
* Rupee rises to 54.76/dollar intraday, highest since Nov.
* Sept. quarter GDP data due Friday
* Local shares close at highest levels in 19 months
By Subhadip Sircar
MUMBAI, Nov 29 The Indian rupee rose
the most in over two months on Thursday after the government
agreed to a vote in parliament on allowing foreign investment in
multi-brand retail, raising hopes it would muster a majority and
push through key reforms.
The rupee, which has been buffeted by concerns of fiscal
deficit and a gaping current account gap, found renewed vigour
as the government showed spunk and allowed a non-binding vote in
parliament on foreign investment in multi-brand retail.
The move raised hopes the opposition would now let
parliament function smoothly, allowing the passage of key
legislation such as foreign investment in pension and insurance,
banking law amendment and other bills.
"The feeling is that the UPA (United Progressive Alliance)
will do something to get support and that reforms will become a
reality," said Subramanian Sharma, director at Greenback Forex,
a forex advisory firm.
"The break of 55.20 saw the unwinding of long dollar
positions and I expect the rupee to move towards 54.20-53.80 to
the dollar in the first quarter of next year," he said.
The government move sparked a rally in local equity markets,
with the benchmark indices hitting their highest close in 19
Goldman Sachs upgraded Indian equities to 'overweight' from
'market-weight', citing growth recovery and inflation moderation
ahead. The Wall Street investment bank also said it was hopeful
about the economy in 2013 and 2014.
A further boost was provided by the substantial gains in
global markets and commodities as comments from a senior U.S.
lawmaker raised hopes of a budget deal by the year-end to avoid
a fiscal crisis in the world's biggest economy.
Dealers said foreign institutional investors sold dollars to
buy local equities, having already invested $1.2 billion in
local stocks in November.
The partially convertible rupee closed at
54.8350/8450 per dollar, up 1.1 percent, its biggest daily gain
since Sept. 21.
The rupee hit an intraday high of 54.76, its highest in two
weeks, and compared with its previous close of 55.45/46 on
The economy will again be in focus on Friday when the
government will detail the July-September GDP data.
India's economy probably expanded near its slowest pace in
three years in the quarter to September, according to a Reuters
poll, suggesting there were few signs of an early turnaround,
despite the reform steps taken by the government to lure back
In the offshore non-deliverable forwards market, the
one-month contract was at 55.13 while the three-month was at
In the currency futures market, the most-traded
near-term dollar/rupee contracts on the National Stock Exchange,
the MCX-SX and the United Stock Exchange all closed at around
55.08 with a total traded volume at around $6.4 billion.
(Reporting by Subhadip Sircar; Editing by Anupama Dwivedi)