Following Tuesday’s gain, the rupee has appreciated by almost 2.77 against the greenback in four trading sessions which is almost a 5% gain. Dealers said that the currency has never bounced back so suddenly and sharply.
Dealers are also looking at the extent of enthusiasm foreign institutional investors will display in Wednesday’s auction of investment entitlements for foreign investors in government and corporate debt. RBI has relaxed the investment ceiling for foreign investors and has also allowed new classes of investors such as sovereign wealth funds to invest in bonds. Successful bidders will have to use up their entitlements within 45 days in the case of government debt and 90 days for investing in corporate paper. There were also rumours that State Bank of India would raise $1 billion of debt which would add to the supply. According to a Crisil report, there is a two out of three chance that the rupee could gain to 50 against the dollar by March 2013 and one of three that it would be in the range of 55-57.