Rupee at 12-month high
The Rupee has strengthened by over 3.5 per cent against dollar in just five trading days and has taken market by surprise as it closed at 46.33 against the US dollar on Thursday, a level that it was last trading at, in September 2008.business Updated: Oct 08, 2009 22:28 IST
The Rupee has strengthened by over 3.5 per cent against dollar in just five trading days and has taken market by surprise as it closed at 46.33 against the US dollar on Thursday, a level that it was last trading at, in September 2008.
Rupee has been strengthening since March 2009 when it hit a low of 52.085 and has risen by 11 per cent since then.
“The rise in rupee is a result of the combination of factors such as flow into equities, external commercial borrowings (ECBs), FDI and trade credit along with weak current account flows as the imports are weak,” said Abheek Barua, chief economist, HDFC Bank.“I expect rupee to trade between 45 and 46 to a dollar by the end of this calendar.”While Rs 67,944 crore has been pumped by the FIIs into the Indian equity market since March 2009 to take advantage of one of the fastest growing stock market, money has also flowed in to take advantage of the interest rate differential between India and the developed nations.
Some experts feel that speculators have been also playing into the market and so further appreciation is limited. “I expect rupee to weaken from here and expect RBI to step in now,” said Jamal Mecklai, CEO, Mecklai Financial Services.
As the importers are bound to benefit from strengthening rupee, the embattled exporters who are already reeling under weak exports would face the double whammy because of the appreciating rupee as they would see their revenues to shrink further.