Rupee rides Sensex rally to record high

Rupee rides Sensex rally to record high
Comment E-mail Print Share
First Published: Wed, Oct 10 2007. 12 34 AM IST
Updated: Wed, Oct 10 2007. 12 34 AM IST
Mumbai: India’s rupee rose to the highest in nine-and-a-half years as the Sensex rally attracted more investors from abroad.
Global funds bought more local equities than they sold for 11 days through 4 October, the longest buying streak in more than two months.
The rupee has rallied 12.1% against the dollar this year, the second best performer in the Asia-Pacific region.
“I think the inflow of funds to India will keep a lot of money available for investment and it is going to be a very attractive destination,” said David Wyss, chief economist at Standard & Poor’s. “The rupee is going to remain strong.”
The rupee rose 0.1% to 39.43 versus the dollar at the 5pm close in Mumbai, according to data compiled by Bloomberg. That is the highest since 27 February 1998.
Overseas funds bought $14.5 billion (Rs57,420 crore) more of Indian shares than they sold this year, surpassing the record $10.7 billion in 2005, data provided by the Securities and Exchange Board of India (Sebi) show. That helped the Bombay Stock Exchange’s 30-share Sensex on Tuesday rise above 18,000 for the first time.
The rupee fell earlier on Tuesday on speculation the central bank will sell the currency to curb a rally that’s eroding export earnings.
Overseas shipments may fall short of the government’s initial estimate because of gains in the rupee, commerce secretary Gopal K. Pillai had said in New Delhi on Monday after the markets closed.
“Speculation the central bank is in the market is helping the dollar rise,” said Shashi Ranjan Giri, a trader with Allahabad Bank Ltd in Mumbai. “The rupee will remain under pressure if this speculation persists. Exporters are losing so the central bank would be concerned.”
Merchandise exports may reach $140 billion in the year ended 31 March, below the $160 billion target, Pillai said. India’s exports, which account for about a tenth of the economy, have slowed as the currency’s biggest gains in at least 33 years make overseas shipments more expensive.
The government last week extended export credit and tax breaks to more industries after the rupee’s appreciation.
A plan for providing cheap credit to exporters was widened to cover goods including jute and carpets, and processed farm products such as cashew nuts, coffee and tea, the government said on 6 October. An export tax refund was extended to areas including general insurance and certification services.
Comment E-mail Print Share
First Published: Wed, Oct 10 2007. 12 34 AM IST