Business Daily from THE HINDU group of publications
Friday, Sep 21, 2007
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Business Daily from THE HINDU group of publications Friday, Sep 21, 2007 ePaper |
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Forex Markets - Foreign Institutional Investors Money & Banking - Interest Rates
Our Bureau Mumbai, Sept. 20 The rupee breached the 40-mark against the dollar on Thursday to close at 39.88/89. Thus, it has extended the gain recorded on Wednesday following the US Federal Reserve’s interest rate cut on Tuesday night. The domestic currency hasn’t seen such levels since May 1998. It opened the day at 40.06/08 and quickly rose to breach 40. After hovering in the range of 39.93-39.95 during the day, it finally closed at 39.88/89, up from Wednesday’s close of 40.19/20. “The rupee’s appreciation was a reaction to the sudden and huge supply of dollars that has flooded the market in the past couple of days,” said Mr Dharmakirti Joshi, Director and Principal Economist, Crisil. FII inflows into the equity market stood at $608 million on Wednesday. In the forward market, the six months premium on the dollar eased to 1.67 per cent from 2.10 per cent the previous day. A similar decline was observed with regard to the 12-month forward rate, which fell to 1.82 per cent from 2.07 per cent. Clearly, while dealers are betting on some strength returning to the dollar, they are nevertheless not sanguine about its prospects compared to the previous day. Traders said that the Reserve Bank of India was present in the forex market but was not able to cap the strength of the currency. The rupee’s jump on Thursday was also attributed to unfavourable US data relating to the consumer price index and home loans released on Wednesday. Treasury officials, however, said that the rupee is likely to stay below 40. “In the short term, the rupee could depreciate slightly as both importers and exporters may hedge and buy dollars,” said Mr R.V.S. Sridhar, Vice-President (Treasury), Axis Bank. “But in the medium and long terms, strong FII, FDI and private equity inflows will keep the rupee below 40,” he added. Rupee hits 9-year high on Fed move Living with a stronger rupee Forex reserves up $3.31 b Rupee appreciation dents export growth sharply in June More Stories on : Forex | Foreign Institutional Investors | Interest Rates
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