Rupee rises after 4 days on Irish bailout talks

The rupee rose, snapping a four- day decline, on speculation Ireland will receive international aid, helping to prevent contagion from spreading.

The European Union and the International Monetary Fund officials travel to Dublin on Thursday to discuss possible aid. Irish central bank Governor Patrick Honohan said he expects the country to ask for a ‘substantial’ bailout from the EU and IMF to rescue its battered banks.

“There are rumours that the European debt crisis may be off and could be bailed out,” said Vikas Babu, a currency trader at Andhra Bank in Mumbai. “This has helped the risk sentiment to be positive for the rupee.”

The currency climbed 0.2% to 45.2250 per dollar as of the 5 pm close in Mumbai, according to data compiled by Bloomberg. It touched 45.5750 earlier, the weakest level since September 24. Indian markets were closed on Wednesday for a public holiday.

Offshore forwards indicate the rupee will trade at 45.85 in three months, compared with expectations of 46.06 on November 16. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.