Re gains on speculation inflows will rise

Re gains on speculation inflows will rise
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First Published: Wed, Apr 01 2009. 10 27 PM IST
Updated: Wed, Apr 01 2009. 10 27 PM IST
Mumbai: The rupee rose for a second day on speculation that overseas investors will increase purchases of local assets after the country’s benchmark share index added to the biggest monthly advance in almost a year.
The currency advanced as the Bombay Stock Exchange’s Sensex rose 2% on Wednesday, following last month’s 9.2% rally.
Overseas funds’ equity purchases exceeded sales by $585 million (Rs2,983.5 crore) in the five days ended 27 March, the most in such a period in a year, data released by the Securities and Exchange Board of India showed.
“Stocks are expected to continue on the recent positive trend and the rupee may benefit from that,” said Roy Paul, assistant manager of treasury at Federal Bank Ltd in Mumbai. “Trading was thin because of banks’ annual accounts closing after the last fiscal year ended yesterday (Tuesday).”
The rupee climbed 0.2% to 50.71 to the dollar at the close, according to data compiled by Bloomberg. It gained 0.8% in March.
The currency still dropped 3.9% in the first three months, a fifth quarter of declines and the longest run of losses since 2002.
India’s exports fell the most in at least 13 years in February as recessions in the US and Europe damped demand for the country’s products. Shipments out of India dropped 21.7% from a year earlier to $11.9 billion, the government said on Wednesday. That was the biggest decline since 1995, according to Bloomberg data. Imports fell 23.3% to $16.8 billion, narrowing the trade deficit to $4.9 billion.
Offshore contracts indicate traders bet the rupee will trade at 51.01 to the dollar in a month, compared with expectations for 51.06 on Tuesday. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non-deliverable contracts are settled in dollars rather than the local currency.
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First Published: Wed, Apr 01 2009. 10 27 PM IST
More Topics: Rupee | Bombay Stock Exchange | Sensex | Equity | Sebi |