Catch me if you can: Rupee scales new peaks

Foreign portfolio investments and trade inflows fuelled the rupee's dream run against the dollar for the third straight year.

Unabated foreign portfolio investments and trade inflows fuelled the rupee's dream run against the dollar for the third straight year with the domestic currency maintaining a firm poise in 2004, notching up a sharp gain of 4.22 per cent, helped largely by a lingering weak dollar overseas.

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Notwithstanding a lower GDP growth of six to 6.5 per cent due to the erratic monsoon conditions, flaring global oil prices and a fair sprinkling of political uncertainties, the rupee held firm as a rock owing to the strong economic fundamentals, dealers said.

Although the rupee appreciation was lower than last year's record 5.32 per cent rise, the gain was on the back of a higher base year, which should not mitigate the sterling performance of the currency in 2004, driven up mainly by sustained heavy FII inflows into the booming stock markets.