Re rises as market sees higher inflows, demand for dollars

Re rises as market sees higher inflows, demand for dollars
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First Published: Thu, Jun 21 2007. 12 02 AM IST
Updated: Thu, Jun 21 2007. 12 02 AM IST
Mumbai: India’s rupee rose on optimism overseas investors will buy shares and bonds of local companies to benefit from a pace of growth that is behind China among major world economies.
ICICI Bank Ltd got bids for more than three times the stock on offer in its share sale as of 5pm on the second day of the sale on Wednesday, according to the National Stock Exchange’s website.
“The broad undertone is still in favour of the rupee because of the huge capital flows we are seeing,” said Vikas Babu, a trader with state-owned Andhra Bank Ltd in Mumbai.
“The dollar supply is going to be much more than demand.”
The rupee rose 0.1% to $40.755 as of the 5pm close in Mumbai, according to data compiled by Bloomberg.
Property developer DLF Ltd raised $2.2 billion (Rs9,020 crore) in India’s biggest initial share sale last week.
The gross domestic product of Asia’s fourth-largest economy has expanded at an average 8.6% in the past four years through 31 March as individuals spent more and companies raised capacities.
Lenders such as YES Bank Ltd, HDFC Bank Ltd and State Bank of India Ltd plan to sell shares and debt to investors abroad to meet accelerating demand for loans.
Indian companies may borrow as much as $13 billion from abroad this year, according to Deutsche Bank AG.
They sold $2.97 billion of debt last year, according to Bloomberg data.
The rupee fell earlier on Wednesday on speculation importers bought dollars to pay for surging crude oil costs.
Refiners may have bought more dollars to boost stocks of oil, the price of which has risen almost 13% this year to a nine-month high. They will save costs on dollar purchases after the rupee gained 8.6% this year. India meets three-quarters of its energy needs from abroad.
“Refiners have been buying increased quantities of dollars, probably due to the pressure from rising crude prices,” said Paresh Nayar, chief of currency and debt trading at Development Credit Bank Ltd in Mumbai. “There’s scope for the rupee to decline further.”
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First Published: Thu, Jun 21 2007. 12 02 AM IST
More Topics: dollar | Money Matters | Currency |