Rupee breaks fall after nine-day slide on dollar sale by exporters

Rupee breaks fall after nine-day slide on dollar sale by exporters
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First Published: Fri, Nov 30 2007. 01 42 AM IST
Updated: Fri, Nov 30 2007. 01 42 AM IST
Mumbai: The rupee gained, ending a nine-day losing streak, on speculation that exporters sold dollars to take advantage of the currency’s recent drop.
The rupee rose from a five-week low as exporters hedged bets to protect themselves in case the currency resumes its two-month rally.
The rupee has risen 11.3% this year—reaching the highest in almost a decade earlier this month, as investors abroad bought record amounts of local shares.
“There appears nothing that can go in favour of the dollar, which is why exporters may be prompted to sell it,” said L.V. Prasad, chief currency trader at IndusInd Bank Ltd in Mumbai. “The broad undertone is still rupee bullish.”
The rupee rose 0.1% to close on Thursday at 39.75 against the dollar in Mumbai, according to data compiled by Bloomberg. The currency may advance to 39.62 this week, Prasad added.
In September, India’s exports of goods rose 19.2% to $12.8 billion (Rs50,944 crore), helping narrow the nation’s trade deficit to $4.42 billion, the Union ministry of commerce and industry had said on 1 November. Merchandise exports account for about 12% of the nation’s $906 billion economy.
On Thursday, the Union government announced measures to help exporters tide over the gain in the ­rupee.
It reduced customs duty on man-made fibre and eased credit terms for leather and textile exporters, said finance minister P. Chidambaram.
The rupee is the second best performer in Asia after the Philippine peso, according to data compiled by Bloomberg.
Gains in the local currency were tempered by speculation importers, such as Indian Oil Corp. Ltd, the nation’s biggest refiner, are purchasing dollars to pay overseas bills due by the end of the month.
“The rupee may find it difficult to strengthen in the near term and so the emerging dollar demand may be sustained,” said V. Rajagopal, Mumbai-based chief currency trader at Kotak Mahindra Bank Ltd. “I expect the rupee to decline in the next few days.”
Payments for oil imports can influence the rupee’s exchange rate because India imports 75% of its energy needs.
Crude oil prices have increased by 54% this year alone.
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First Published: Fri, Nov 30 2007. 01 42 AM IST