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Rupee surges on day, but down sharply in 2008-09

Rupee surges on day, but down sharply in 2008-09
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First Published: Tue, Mar 31 2009. 07 20 PM IST
Updated: Tue, Mar 31 2009. 07 20 PM IST
Mumbai: The rupee rose nearly 1% as shares gained on Tuesday, a small positive at the end of its biggest fiscal year fall since the 1991-1992 balance of payment crisis.
The partially convertible rupee closed at Rs50.71/72 per dollar, 0.9% stronger than its previous close of Rs51.17/19, but still lost 4% in the March quarter.
“The rupee rose tracking the dollar’s weakness against the G7 currencies and also the positive equity markets,” said L. Subramanian, chief dealer with ICICI Bank.
The stock market rose 1.5%, enough to propel it to its first quarterly gain since 2007 after easing concerns about the global economy revived investor appetite and sparked a worldwide rally in March.
The dollar lost ground against the euro on Tuesday with quarter-end flows overriding fundamentals even as markets geared up for a G-20 meeting.
“The dollar index is quite bearish, so the rupee is expected to rise towards Rs49.78 in the near-term. But in the medium-term it is expected to be rangebound between Rs49.5 to Rs52.5,” Subramanian said.
The rupee dropped nearly 21% in the 2008-09 fiscal year that ended on Tuesday, its biggest fall since the balance of payment crisis in 1991-1992 knocked it down more than 37% against the dollar, according to Reuters data.
The currency has been hit hard by a large stream of capital outflows from the share market, a widening current and trade account deficit and a slowing economy.
Foreign funds have pulled out a net $1.5 billion from Indian shares in the first quarter of 2009. Last year, net outflows of more than $13 billion, had pushed the rupee down 19.1%.
In 2007, record inflows of $17.4 billion had helped drive the rupee up 12.3%.
The current account deficit widened to $14.64 billion in the October-December quarter from a revised $4.53 billion a year earlier, the Reserve Bank of India said.
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First Published: Tue, Mar 31 2009. 07 20 PM IST
More Topics: Markets | India | Rupee | Dollar | Currency |