Mumbai: Rupee is likely to jump down on Thursday, terrified of capital outflows as regenerated concerns about a worldwide credit squeeze beat Asian stock markets.
Equity inflows have been a key driver for the rupee that hit a nine-year high of 40.20 a dollar in July.
Foreigners have purchased about $9.5 billion of local shares in 2007, appending to $7.9 billion last year, but they have been decompressing this month.
The partly exchangeable rupee dangled to 40.75/76 on Tuesday, its feeblest closing since June 28.
On Dollar demand by Indian oil importers, the Indian Rupee closed flat against US currency.
The Indian unit that climbed up to 40.53 in the morning session gave up its advances on intense Dollar demand by Indian oil importers. Furthermore, foreign monetary funds also ramped up Dollar positions today further assisting the US currency in opposition to Rupee.
Mumbai: Rupee climbed as Asian stock markets stabilized, regenerating anticipations for foreign capital inflows into local shares.
The partly convertible rupee came up as against its weakest close in over a month on Friday. In late July, it hit a nine-year peak of 40.20.
In the last two sessions, foreigners have purchased $142 million of shares after selling over $600 million so far this month.
In the afternoon trades, the BSE IT index gained 24 points to 4,758.66 owing to the decrease in the rupee values as against the dollar.
In order to tame the rupee, the government had constricted foreign-borrowing rules on 7 August 2007. Now, external commercial borrowings (ECBs) over $20 million have been permissible only for foreign currency expenditure for allowable end-uses and are required to be parked abroad.
On the back of jump in foreign currency and assets collections, Forex reserves soared up by USD 3.307 billion to USD 225.35 billion as on July 27.
According to RBI’s weekly statistical supplement, foreign currency and assets got to USD 218.096 billion on the back of USD 3.306 billion. In the same period, reserve position in IMF dropped by USD 10 million to USD 455 million.
The Indian Rupee showed some resilience resuming higher against the US currency in early trade today.
The local currency resumed higher at 40.39/40 a dollar from overnight close of 40.42/43 per dollar but later fell back to 40.41/42 a dollar in late morning deals in quiet trade at the Interbank Foreign Exchange (forex) market.
On the back of rise in foreign currency and assets collections, Forex reserves soared up by USD 937 million to USD 213.486 billion on June 29 on week-on-week-basis.
According to the Reserve Bank of India’s (RBI) weekly statistical supplement released on July 6, 2007, foreign currency and assets reached USD 206.114 billion on the back of USD 936 million rise.
The IMF reserve position also came up by USD 1 million to USD 460 million during the same period.
On the other hand, gold reserves and the special drawing rights (SDRs) remained unaltered at USD 6,911 million and USD 1 million correspondingly.
Mumbai: Today, the rupee climbed to its peak level within a month, driven by the viewpoint of soaring investment flows into Asia’s third- biggest economy.
In morning, the rupee was at 40.54/55 a dollar, which is its highest peak since June 6, and strengthening from Monday's 40.65/66.
The chief dealer with the foreign bank anticipating the rupee to trade in a 40.52-40.62 rannge today said, “The positive signals from Asian equities are leading the market to believe that the stock market will do well, and that the inflows will be good.”
He stated that the RBI was expected to get involved at around 40.52 to restrict the rupee’s advancements.
Mumbai: Union Bank of India (UBI), Bank of India (BOI) and State Bank of India (SBI) have altered the rate of interest on FCNR (B) and NRE (rupee) depository terms w.e.f July 1, 2007.
In case of FCNR (B) deposits, the rate of interest on dollar deposits of different tenure periods include; 4.68 per cent for one to less than two years from 4.64 per cent, 4.68 per cent for two to less than three years from 4.57 per cent, 4.71 per cent for three to less than four years from 4.55 per cent, 4.75 per cent for four to less than five years from 4.55 per cent and 4.79 Per cent for five years from 4.57 per cent.
The interest rate for NRE deposits are: 5.43 per cent for one to less than two years from 5.39 per cent, and 5.43 per cent for two to less than three years from 5.32 per cent.
On the back of continued buying by importers and surmised intervention by the Central Bank, the rupee ended further down at more than one-week low of 40.87/88 versus the U.S. currency on Monday.
At the Interbank Foreign Exchange (Forex) market, the local unit opened up faintly inferior at 40.76/78 per dollar as compared to its Friday’s close of 40.75/76 a dollar.
It diluted more to close at 40.87/88, a sharp drop of 12 paise over its last end. It moved in a range of 40.76 and 40.8950 a dollar.
According to the reckonings of Treasury managers and economists, the rupee could slide back to its 43 levels against the US dollar by the end of this calendar year; the short term gains of the local currency indicated at a weaker currency over the medium term.
Decline of dollar against most major currencies is turning out to be great for Indian economy. The rupee has improved hugely to close at 41.85/86 against the dollar, which is recorded as a nine-year high.
The world-wide flaw of the dollar, attached with the resumed inflows from foreign institutional investors (FIIs) and the tightening of domestic rates assures traders to purchase the rupee and sold the dollar. This scenario would surely ease inflation because of decline in the cost of imports.
Indian industry looked confused over the issue whether the RBI should intervene in order to protect exporters from the gaining rupee or not.
As per CII, the domestic industry would have to accept a strengthening rupee in the short term, whereas, FICCI, Assocham and FIEO fancies RBI to check the sharp climb in the currency.
The rupees closed at 42.90 in comparison to dollar on Thursday, which has been recorded as the highest closing in past eight years. The rupee was grown to 42.84 per dollar and closed at 43.08 on Wednesday in intra-day trade. Treasury (British cabinet that is responsible for economic strategy) cleared that bargainers make short position in the hope that Reserve bank of India would not interfere to limit benefits. The rupees were around the 43.15 for the most part of the day.
The foreign broking firms opine that the Indian currency could become commanding currency in Asia. This reckoning came a day after an expert committee made out a case on Monday for making the rupee fully convertible before the end of 2008.
The Indian Rupee, on Wednesday, surged to its highest level in nearly 8 years. The Rupee traded 43 to a dollar as banks sold the US unit to raise funds to meet statutory reserve requirements.
According to reports, ending at 43.065/075 on Tuesday, the rupee was at 42.925/935 per dollar at 10:15 am on Wednesday, off an early high of 42.84, it’s strongest since June 1, 1999, when it traded at 42.83.
The Rupee has gained about 9.5 % since hitting a 3-year low last July, and the central bank is thought to be uneasy with the rupee's pace of appreciation.