Greek aid plan lifts Rupee; yields up

MUMBAI: The rupee rose to its highest level in 11 days, after European leaders agreed on more financial aid for Greece, reducing concern about the region's debt crisis and bolstering demand for emerging-market assets.

The Bloomberg-JPMorgan Asia Dollar Index reached the highest level since August 1997 after the 159 billion euro ($229 billion) plan was announced in Brussels on Thursday. The BSE's Sensex rose 1.6% on Friday. Overseas investors bought $75 million more local stocks than they sold in the first three days of the week, according to exchange data.

"We are seeing foreign flows into equities after the positive news in Europe," said Sudarshan Bhatt, chief currency trader at Mumbai-based Corporation Bank. "The dollar's weakness against major global currencies is also helping the rupee."

The rupee advanced 0.4% this week to 44.35 per dollar at close in Mumbai, according to data compiled by Bloomberg. The highest since July 11. Offshore forwards indicate the rupee will trade at 44.83 in three months, compared with expectations of 45.04 on Thursday. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.

Meanwhile, benchmark bond yields rose on Friday as the EU leaders' draft rescue package for Greece eased worries of a default and spurred investors to buy riskier assets, while higher crude oil prices also dented sentiment for safe-haven government debt. The 10-year benchmark bond yield closed up 4 bps at 8.31% after trading in a range of 8.30-8.33% during the day.