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Rupee strengthens for sixth week as risk appetite builds

Rupee strengthens for sixth week as risk appetite builds
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First Published: Fri, Apr 17 2009. 10 50 PM IST
Updated: Fri, Apr 17 2009. 10 50 PM IST
Mumbai: The rupee rose for a sixth week as a global stocks rally spurred investor demand for higher-yielding assets, helping the nation attract funds. The currency this week reached a two-month high as official figures showed overseas investors added to their holdings of the nation’s stocks on each trading day in the first half of this month. The Sensex on the Bombay Stock Exchange has jumped 24% since the end of February and this week posted its highest close in six months.
“The short-term outlook is positive for stocks and the currency, as their movement is showing this may be the trend for some time,” said P.V. Shreedharan, chief currency trader at Development Credit Bank Ltd.
The currency strengthened 0.4% this week to 49.865 per dollar at close in Mumbai, according to Bloomberg data. It touched 49.34 on Thursday, the strongest it’s been since 17 February.
Foreign institutional investors (FIIs) bought a net $766 million (around Rs3,807 crore) of Indian shares this month through 15 April, compared with $131.6 million in all of March, according to the Securities and Exchange Board of India (Sebi) data. The rupee may strengthen 6.1% to reach 47 a dollar in six months on better prospects for global growth and an increase in foreign investment, according to Barclays Plc.
Asia’s third biggest economy may see a recovery in the three months ending 31 December, after the growth rate reaches a bottom in the prior quarter, helping the nation post a balance of payments surplus in the second half of the year, Sailesh Jha, an economist at the world’s third largest currency trader, wrote in a research report dated Thursday. He had forecast last month that the rupee would drop to a record-low 56 by end-June.The median estimate of 25 strategists surveyed by Bloomberg is for the rupee to weaken to 50 by end-September and to reach 48.98 by the end of the year.
Barclays maintained its growth forecast for India at 4% in the fiscal year that started 1 April. The economy expanded 5.3% in the three months through 31 December, the slowest pace in six years. Growth in the year that ended 31 March may have dipped below the government’s target of 7%, Prime Minister Manmohan Singhsaid on 13 March.
The Reserve Bank of India will keep interest rates unchanged on 21 April, Jha predicted, adding that the cycle of reductions may be approaching an end. Governor D. Subbarao has slashed the benchmark overnight lending rate, or repurchase rate, five times since mid-October to 5%, the lowest level since it was introduced in 2000.
The deficit in India’s balance of payments widened to a record $17.9 billion in the December quarter, compared with a shortfall of $4.7 billion the previous quarter.
Offshore contracts indicate traders are betting the rupee will trade at 50.01 to the dollar in a month, compared with expectations for a rate of 49.94 a week ago. 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. Bloomberg bloomberg
The rupee rose for a sixth week as a global stocks rally spurred investor demand for higher-yielding assets, helping the nation attract funds. The currency this week reached a two-month high as official figures showed overseas investors added to their holdings of the nation’s stocks on each trading day in the first half of this month. The Sensex index on the Bombay Stock Exchange has jumped 24% since the end of February and this week posted its highest close in six months.
“The short-term outlook is positive for stocks and the currency, as their movement is showing this may be the trend for some time,” said P.V. Shreedharan, chief currency trader at Development Credit Bank Ltd.
The currency strengthened 0.4% this week to 49.865 per dollar at close in Mumbai, according to Bloomberg data. It touched 49.34 on Thursday, the strongest it’s been since 17 February.
Foreign institutional investors (FIIs) bought a net $766 million (around Rs3,807 crore) of Indian shares this month through 15 April, compared with $131.6 million in all of March, according to the Securities and Exchange Board of India (Sebi) data. The rupee may strengthen 6.1% to reach 47 a dollar in six months on better prospects for global growth and an increase in foreign investment, according to Barclays Plc.
Asia’s third biggest economy may see a recovery in the three months ending 31 December, after the growth rate reaches a bottom in the prior quarter, helping the nation post a balance of payments surplus in the second half of the year, Sailesh Jha, an economist at the world’s third largest currency trader, wrote in a research report dated Thursday. He had forecast last month that the rupee would drop to a record-low 56 by end-June.
The median estimate of 25 strategists surveyed by Bloomberg is for the rupee to weaken to 50 by end-September and to reach 48.98 by the end of the year. Barclays
maintained its growth forecast for India at 4% in the fiscal year that started 1 April. The economy expanded 5.3% in the three months through 31 December, the slowest pace in six years. bloomberg
The rupee rose for a sixth week as a global stocks rally spurred investor demand for higher-yielding assets, helping the nation attract funds. The currency this week reached a two-month high as official figures showed overseas investors added to their holdings of the nation’s stocks on each trading day in the first half of this month. The Sensex on the Bombay Stock Exchange has jumped 24% since the end of February and this week posted its highest close in six months.
“The short-term outlook is positive for stocks and the currency, as their movement is showing this may be the trend for some time,” said P.V. Shreedharan, chief currency trader at Development Credit Bank Ltd.
The currency strengthened 0.4% this week to 49.865 per dollar at close in Mumbai, according to Bloomberg data. It touched 49.34 on Thursday, the strongest it’s been since 17 February.
Overseas investors bought a net $766 million (around Rs3,807 crore) of Indian shares this month through 15 April, compared with $131.6 million in all of March, according to the Securities and Exchange Board of India data.
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First Published: Fri, Apr 17 2009. 10 50 PM IST
More Topics: Rupee | Currency | Markets | Stocks | Dollar |