The Hindu : Rupee scales new peak

Online edition of India's National Newspaper
Saturday, Jul 05, 2003

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Business

Rupee scales new peak

MUMBAI JULY 4. Breaching key resistance levels, the rupee strode to a new 30-month closing peak of 46.33/34 a dollar today, driven-up by robust trade and capital inflows in the absence of intervention by the central bank to arrest its sharp rise.

Notching up a steep seven paise gain from Thursday's finish of 46.40/41, the rupee appears set to climb to new highs on the back of strong dollar supplies from exporters and foreign funds even as demand for the greenback from corporates and importers remained negligible, dealers said. It opened on a firm footing at 46.3950/4050 and tested the intraday high of 46.31/32 in thin trading because of the U.S. Independence Day holiday, they added. The rupee had last posted a closing quote of 46.34/35 on January 23, 2001.

After piercing through the 46.40 a dollar barrier, the rupee broke through the crucial 46.35 a dollar level and touched the intraday high of 46.31/32, before settling at 46.33/34 at the close, a dealer said, adding "The rupee's gains were aggravated by the absence of central bank intervention".

For the better part of the current week, State-run banks made heavy dollar purchases to contain the rupee's rise in a bid to protect exporters' interest.

Public sector banks intervene at the behest of the Reserve Bank of India to prevent volatility and excessive speculation in the currency market.

The RBI fixed the reference rate for the U.S. currency at Rs. 46.33 and for the single European unit at Rs. 53.11.

Barring the stray setbacks, the rupee has shown a consistent firm trend and has appreciated by nearly 30 paise in the last ten sessions, backed by a sustained flow of dollars from exporters and foreign fund inflows. Foreign institutional investors invested around Rs. 3,500 crores in Indian markets in June, taking the net FII inflows in the first six months of 2003 beyond the Rs. 10,000-crore mark.

Exporters resorted to hectic forward dollar sales in the belief that the rupee would strengthen further in the near to medium term, dealers said.

— PTI

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