Rupee gains momentum despite RBI`s intervention
Weekly wrap up: Rupee gains momentum despite RBI`s intervention Indian Rupee strengthened on September 24, as immense inflow of capital continued followed by gains in local equity market that crossed the level of 16,000 mark. Speculation of low home sales and low consumer confidence of the US economy have influenced the foreign investors to change their portfolio and invest in high yielding Indian assets like Rupee. Change in pattern of consumer attitudes and spending by the overseas investors of US economy in emerging markets like India outweighed the efforts made by the RBI to purchase Dollars. Indian Rupee closed up at 39.770/775 a Dollar, as against 39.90/91 on previous working day i.e. Friday. At the intra-day trading, Rupee rose to a peak of 39.72. The local currency continued its rally on September 25 , which led the local bourses to zoom into positive zone and touched a high of 16,915.91 in the opening trades. The local currency surged to a n ine year high, as inflow of capital from overseas through FIIs, mutual funds, investors flooded the equity market. Rupee rally moved northward as investors believed reaping gains from this asset, in the wake of the financial losses incurred by the corporates. Indian Rupee consequently ended up at 39.735/745 a Dollar as against Monday`s close of 39.770/775. Local unit escalated on September 26 as investor`s chose to park their investments in the Indian assets continuously. Consistent inflow of capital, followed by Sensex touching 17 K spread optimism among the investors, which led Rupee to surge to its highest peak. Further, the local currency gained momentum against the greenback on sluggish US data on home sales and consumer confidence. US consumer confidence index was low at 99.8 as on September 25 as against 105.6 last month. Also home sales showed a 5.500 for September as against 5.750 last months. Weak performance of the US economy made the investors park their inv estment in emerging markets like India, which in turn caused the local regulators to worry. In a move to aid exporters and restrain capital inflows, the central bank announced a series of measures to help outflow of capital from the domestic market. It has eased norms for overseas investment and loan repayment norms for companies, individuals and mutual funds.“We believe it is possible to sustain the factors that are driving economic growth and consolidate the gains. There are, of course, some risks,“ says Chidambaram. Indian Rupee ended high at 39.700/705 a Dollar, as against 39.735/745 on previous working day i.e Tuesday on bright outlook of Indian economy. Indian Rupee dropped marginally on September 27, followed by continued intervention by the central bank.The Rupee rally was reversed as banks were purchasing Dollars on behalf of central bank. Exporters, who incurred loss on Rupee gaining momentum until now, sighed on intervention of RBI. As Dollar won the race against the local unit on September 28, traders choose to cut short positions and bought US currency. Weak local unit is also attributed to a series of measures taken by the Reserve Bank of India to slow the inflow of capital and create avenue for outflow of capital. Indian Rupee settled down at 39.71/72 a Dollar as against the previous close of 39.700/705 on Wednesday. Indian Rupee fell on Sep. 28, 2007 as Reserve Bank of India bought Dollars despite strong flow of investment in the equity market.In a move to curb rapid upward momentum of Rupee. Central bank bought Dollars which in turn aids exporters in the market.Traders continued to take short positions, despite the stock market rallying positively. Sentiments of the investors were affected with possible capital outflows, and possible correction in the stock market. Correction implies a reverse movement, usually negative, of at least 10% in a stock index. It is generally temporary price decline, interrupting an u ptrend in the market or asset.Indian Rupee closed down at 39.8450/8500 a Dollar, as against a close of 39.71/72 on the previous working day.
