Rupee hits 25-month high
The rupee hit a 25-month high of Rs 44.17 to the US dollar on Thursday, but don’t bank yet on a further strength that could make your foreign trip or overseas education cheaper, say experts, HT reports.business Updated: Oct 07, 2010 23:46 IST
The rupee hit a 25-month high of Rs 44.17 to the US dollar on Thursday, but don’t bank yet on a further strength that could make your foreign trip or overseas education cheaper, say experts.
The rupee has risen by 6.2 per cent since September 1 on the back of record inflows from foreign institutional investors (FIIs) amounting to Rs 36,873 crore over the same period. On Thursday alone, FIIs pumped R2,285 crore, making the rupee hot up.
The Reserve Bank of India (RBI) is worried and so are exporters who will get fewer rupees for every dollar they earn.
“Given the pace of the FII flows we may temporarily see it to go below the 44 level but then I expect RBI may intervene if that happens,” said Abheek Barua, chief economist at HDFC Bank. “As the pace of inflow slows we may see a trend reversal.”
“The pace of decline of dollar has accelerated over the past one week but now I think that we are close to the end of the dollar’s current decline,” said Jamal Mecklai, CEO, Mecklai Financial Services.
Market experts say profit-booking in stocks towards the end of the year and money leaving the country after failing to get full allotment for Coal India’s initial public offer of shares may also arrest the rupee’s surge.
Until then, importers, travellers and students abroad may benefit while exporters will fret.