Rupee halts 2 months of gains as funds cut holdings

Rupee halts 2 months of gains as funds cut holdings
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First Published: Sat, Dec 01 2007. 12 18 AM IST
Updated: Sat, Dec 01 2007. 12 18 AM IST
New Delhi: The rupee snapped two months of gains as overseas investors reduced their holdings of local stocks on concern losses at global financial companies related to subprime loans will keep rising.
The currency retreated from the highest in almost a decade also on speculation oil refiners increased purchases of dollars to settle month-end import bills. Investors based abroad turned net sellers of Indian stocks in November, according to data provided by the market regulator Securities & Exchange Board of India (Sebi).
“The rupee is in for a few days of bearishness,” said Sanjay Kumar Sahay, a currency trader at State Bank of Travancore in Mumbai. “December isn’t usually a good month for fund inflows” as investors repatriate profits from stock gains toward the end of the year.
The rupee fell 0.7% this month to 39.615 against the dollar in Mumbai, from 39.3275 on 31 October, according to data compiled by Bloomberg. It may trade between 39.65 and 39.80 in the coming days, Sahay said.
Overseas funds sold $1.26 billion (Rs5,002 crore) of Indian stocks more than they bought this month, compared with net purchases of $4.26 billion in October and $4.6 billion in September, according to data provided by Sebi. Record net purchases that reached almost $18 billion this year, twice as much as 2006, helped propel the rupee to 39.185 on 7 November, the highest intra-day level since February 1998.
The currency has risen more than 11% this year, making it the second best performer in Asia after the Philippine peso. Asia’s third biggest economy expanded 8.9% in the three months through September, slower than the 9.3% gain in the previous quarter, a government report showed on Friday.
“Despite a slowdown in manufacturing, the sustained rate of investment gives me the confidence that the year will end pretty close to 9% growth,” finance minister P. Chidambaram told reporters in New Delhi on Friday.
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First Published: Sat, Dec 01 2007. 12 18 AM IST