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This is an archive article published on July 4, 2012

Rupee gains 105 paise on capital inflow

The rupee fell below the 55 level against the dollar for the first time in nearly four weeks to close at 54.38

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The rupee fell below the 55 level against the dollar for the first time in nearly four weeks to close at 54.38 on Tuesday. The gain of 105 paise or 1.89 per cent from its Monday closing came amid sustained capital inflows and continued selling of the greenback by exporters and banks.

The rupee opened higher at 55.35 per dollar from Mondays close of 55.43,but immediately touched a low of 55.44 on some hesitancy in stock markets and dollar demand. However,the tide turned with exporters selling dollars and a fresh dose of capital inflows into stocks. FIIs pumped in nearly Rs 590 crore in the stock market,as per provisional data. This helped rupee bounce back sharply to a high of 54.35. The domestic currency closed at 54.38 registering the fourth largest gain in absolute terms in the last decade.

Most Asian currencies rose against the dollar as hopes of further monetary easing by major central banks boosted demand for riskier assets. Traders also cited some talk of foreign funds bringing in dollars ahead of the auction of foreign investor limits in government debt.

The government last week increased foreign investor limits in government debt by 5 billion to 20 billion. The increased limits will be auctioned by the market watchdog on Wednesday.

Portfolio investors too have turned bullish after the government released draft rules last week and said the general anti-avoidance rules,or GAAR,would not apply retroactively,allaying concern of such investors.

Gaining currency

On June 22,the rupee hit a lifetime low of 57.32 a dollar on fears of weak domestic growth

Most Asian currencies rose against the USD on hopes of further monetary easing by major central banks

 

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