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CEOs expect rupee to breach 37 against dollar by March, says survey

CEOs expect rupee to breach 37 against dollar by March, says survey
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First Published: Thu, Oct 04 2007. 12 29 AM IST
Updated: Thu, Oct 04 2007. 12 29 AM IST
New Delhi: The rupee climbed to the highest in more than nine years as the Sensex rallied to a record, suggesting money is?still?flowing in from overseas.
The rupee may extend gains to 37 against the dollar—the highest in more than a decade by March, the Associated Chambers of Commerce and Industry of India (Assocham) said, citing its survey of 215 chief executive officers (CEOs).
Almost 71% of those surveyed predicted the level, which hasn’t been reached since November 1997, the New Delhi-based lobby group said in a statement by email.
Fund managers will increase investment in India as a US interest rate cut last month prompts them to seek higher returns in the world’s second fastest growing major economy, it said.
“After the cut in rates, the arbitrage opportunity of shuffling money from the US to Indian markets has increased,” Assocham said.
Should inflows “maintain their pace at the present level, it will not be possible for the central bank to check the appreciation” of the rupee. The rupee rose 0.7% to close at 39.59 per dollar in Mumbai—the strongest close since 14 April 1998, according to Bloomberg data. It advanced to 39.62—a nine-year high, on 26 September and is up 11.3%.
Global funds bought $4.6 billion (Rs18,308 crore) of Indian shares more than they sold last month, compared with net sales of $1.9 billion in August, data from the Securities and Exchange Board of India showed.
The Reserve Bank of India (RBI) is “left with few options but to cut interest rates,” Assocham said, citing the survey. RBI governor Y.V. Reddy has increased the rate at which the central bank injects funds six times since 2006 to a five-year high, and has also raised the amount of cash lenders must set aside four times since December to 7%.
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First Published: Thu, Oct 04 2007. 12 29 AM IST
More Topics: Rupee | dollar | RBI | foreign exchange | Assocham |