Re rises on speculation of overseas funding

Re rises on speculation of overseas funding
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First Published: Fri, May 04 2007. 12 16 AM IST
Updated: Fri, May 04 2007. 12 16 AM IST
Mumbai: India’s rupee rose, ending two days of losses on speculation that overseas investors purchased local company shares to benefit from the growth that’s the second-fastest among the world’s major economies.
Indian markets reopened following a two-day holiday, with the rupee extending gains of the previous two months. The nation’s benchmark stock index rose the most in almost two weeks after Housing Development Finance Corp. Ltd, a mortgage lender partly owned by Citigroup Inc., said fourth-quarter profit rose 29% from a year earlier.
“Outlook on India’s growth is seen with optimism and is attracting capital flows on a sustained basis,” said V. Rajagopal, chief currency trader at Kotak Mahindra Bank Ltd in Mumbai.
“That’s boosting dollar supply and helping the rupee.”
The rupee rose 0.2% to Rs41.11 against the dollar as of the 5pm close in Mumbai, compared with Rs41.17 on 30 April, according to data compiled by Bloomberg. It may advance to Rs41 in the next few days, Rajagopal said.
The government in February forecast gross domestic product to rise 9.2% in the year through March, the fastest since 1989. Official data are due on 31 May.
Overseas funds sold more Indian shares than they bought in only seven days of the month through 27 April, according to the stock market regulator. They purchased $3.01 billion (Rs12,341 lakh crore) in the year through 27 April, after acquiring $8 billion in 2006 and a record $10.7 billion in 2005.
The rupee declined earlier on speculation that importers were buying dollars after India’s currency had the biggest monthly gain in three decades.
“Some importers are showing interest to buy dollars,” said Parthasarathi Mukherjee, treasurer at UTI Bank Ltd in Mumbai. “It’s an opportunity for them, given the recent rise in the rupee. I expect the rupee to decline.”
The rupee rose 5.3% in April, the best since February 1973, making it cheaper for companies such as Indian Oil Corp. and Bharti Airtel Ltd to purchase the US currency. Gains in the rupee reduce the cost of imports, which rose 26.4% to $181.36 billion in the fiscal year ended March 31, the government said.
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First Published: Fri, May 04 2007. 12 16 AM IST
More Topics: Money Matters | Currency |