Rupee edges up in choppy post-budget trade
The Rupee crept higher in choppy trade following the budget, with traders saying the overall impact of the budget measures were positive for growth.india Updated: Feb 28, 2006 17:09 IST
The Rupee crept higher on Tuesday in choppy trade following the 2006/07 budget, with traders saying the overall impact of the budget measures were positive for growth and in turn the local currency.
The rupee had briefly come under pressure earlier after the government announced a higher tax on securities transactions, dampening sentiment among stock market investors.
But investors focus turned to proposals that they believed would increase foreign fund inflows into India and underpin the rupee. One such measure was a rise in the amount of bonds foreign investors can buy.
At 3:30 pm (1000 GMT), the rupee was trading at 44.44 per dollar, up 0.14 percent from Monday's close and near a session high hit earlier at 44.42.
"The view on the rupee is positive after the budget. It is a very growth orientated budget and there has been a rise on the cap for investment in bonds," said Pravesh Malhotra, a trader at Centurion Bank.
Chidambaram said in his speech that foreign institutional investors would be allowed to buy up to $2 billion of Indian government debt, up from $1.75 billion.
India's equity market traded almost 1 per cent higher, recovering losses made after the announcement that a securities transaction tax would rise.
Foreign funds have moved almost $2.3 billion into Indian shares this year after a record $10.7 billion inflow last year.
Analysts also noted government efforts to cut its budget deficit to 3.8 percent of gross domestic product in the fiscal year starting in April from 4.1 percent in the current year.
Dealers said there had been some dollar buying by state banks but it was unclear whether this was on behalf of corporates or the central bank.