Rupee gains on fund-buying speculation

Rupee gains on fund-buying speculation
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First Published: Tue, Dec 11 2007. 11 05 PM IST
Updated: Tue, Dec 11 2007. 11 05 PM IST
Mumbai: The rupee rose on speculation that overseas investors will increase their purchases of local stocks to benefit from the nation’s record economic growth. The currency rose to the strongest in three weeks ahead of Wednesday’s government report that may show industrial production accelerated, according to a Bloomberg News survey. The rupee is headed for its biggest annual gain since at least 1974 and is the second best performer in the past 12 months among the 10 most-traded currencies in Asia outside Japan.
“The fundamentals of the economy are strong and are giving confidence to global investors,” said Sanjay Arya, treasurer at state-owned Bank of Maharashtra Ltd in Mumbai. “The bias will remain for the rupee to keep rising.”
The local currency gained 0.2% to 39.345 against the dollar at the close of trading in Mumbai, according to data compiled by Bloomberg. It may strengthen to as high as 39.20 in the next few days, Arya said.
Production at factories, utilities and mines may have increased 10% in October from a year earlier, compared with September’s 6.4% gain, according to the median forecast of 18 economists surveyed by Bloomberg.
Demand for cars, mobile phones and manufactured products has climbed as salaries in Asia’s third biggest economy have risen.
The rupee’s gains were moderated by speculation the central bank sold the currency to stem a rally that eroded export earnings. It has risen 12.5% versus the dollar this year.
“There is an urgent need for the government to take measures to bring relief for exporters and help them not lose their markets,” said Ganesh Kumar Gupta, president of the Federation of Indian Export Organizations in New Delhi. “The government should intervene to arrest the appreciation of the rupee and help contain its impact.”
A stronger currency makes Indian goods and services more expensive to customers abroad.
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First Published: Tue, Dec 11 2007. 11 05 PM IST
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