Rupee gains 0.4% to US49.46/$

The currency recovered 1.7% from an all-time low of 50.29 it touched on Oct. 27, trimming this month`s loss to 5%.


Rupee strengthened the most in three weeks on signs that global credit crises are improving as central banks from the U.S. to Japan cut interest rates and pump funds into the financial system. Standard & Poor's maintained India's investment-grade credit rating, citing ``strong economic growth prospects.'' The BSE Sensex posted its biggest weekly gain since April 2001.

The rupee climbed 0.4% to 49.4575 a dollar at 5 p.m. to close, from 49.675 on Oct. 29, according to the reports. Indian markets were closed yesterday for a holiday. The currency recovered 1.7% from an all-time low of 50.29 it touched on Oct. 27, trimming this month's loss to 5%, the report stated.

The BSE index gained 12.5% this week, rebounding from a three-year low it touched this month. The rupee has weakened more than 20% during the current year, the second-worst performer after the South Korean won of the 10 most-active Asian currencies, as foreign funds sold a record US$12.8bn more local assets than they bought.

Foreign-exchange reserves fell US$15.5bn in the week ended Oct. 24, the most on record, to US$258.4bn, according to the RBI data. The drop indicates the Reserve Bank of India sold dollars to stem the currency's decline.

The Bank of Japan today cut its benchmark interest rate to 0.3% from 0.5% following a Federal Reserve reduction of half percentage point to 1% on Oct. 29.
China reduced borrowing costs for the third time in two months earlier this week after India reduced its lending rate on Oct. 20 for the first time since 2004.

S&P today indicated that the global financial crisis won't hurt Asia's third-biggest economy as India's ``business environment is likely to improve in the years ahead.'' GDP may grow by as little as 7.5% in the year to March 31, the slowest pace in four years, RBI added.

The gap between the onshore spot rate and the 12-month non- deliverable rupee forwards narrowed to 4.3675 from 5.625 on Oct. 29. The spread widened to a record 7.2525 rupees on Oct. 27. Non-deliverable contracts are used for currencies that can't be freely converted and are settled in dollars.