Feb. 2 (Bloomberg) -- India’s rupee climbed to a three- month high after a private report showed the nation’s manufacturing expanded at the fastest pace in eight months.
The currency rose for a third day, strengthening past 49 per dollar for the first time since Nov. 4, after HSBC Holdings Plc and Markit Economics reported yesterday that the Purchasing Managers’ Index rose to 57.5 in January from 54.2 the previous month. Overseas investors bolstered holdings of Indian shares by $2.2 billion in January, exchange data show.
“The manufacturing data are supporting investor sentiment and the expectation of inflows” and helping the rupee gain, said Paresh Nayar, Mumbai-based head of money-market and currency trading at FirstRand Bank Ltd. After rising past the “important psychological level” of 49, the rupee may find technical resistance at 48.80, he said. Resistance refers to a level on a price chart where sell orders may be clustered.
The rupee advanced 0.2 percent to 49.16 per dollar in Mumbai, according to data compiled by Bloomberg. It touched 48.95 earlier, the strongest level since Nov. 1, and has appreciated 7.9 percent this year in Asia’s best currency performance.
The rupee also advanced after reports yesterday showed manufacturing picked up last month in the world’s biggest economies. The official Chinese purchasing managers’ index increased to 50.5 from 50.3 in December. In the U.S., the Institute for Supply Management’s factory index rose to 54.1 from 53.1 in December.
India’s central bank asked commercial lenders to “rigorously evaluate” the unhedged foreign-currency exposures of their clients and charge a premium for such risks while extending credit to them, according to a statement on its website today.
Three-month onshore forward contracts traded at 50.16 a dollar compared with 50.31 yesterday. Offshore non-deliverable forwards were at 50.08 versus 50.30. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.
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