The Hindu : Rupee closes at two-year peak

Online edition of India's National Newspaper
Wednesday, May 21, 2003

Business

Business

Rupee closes at two-year peak

MUMBAI MAY 20. Surging corporate and trade inflows, coupled with a lingering weak dollar overseas, drove the rupee to a fresh two-year closing peak of 46.90/91 a dollar today, stretching record gains for the tenth consecutive trading session.

Notching up another nine paise from Monday's 23-month closing high of 46.99/47.00, the rupee maintained a bullish trend on the back of sustained heavy inflows from exporters and non-resident Indian (NRI) remittances, dealers said. It opened on a firm footing at 46.9750/9850 and touched the intraday high of 46.89/90.

Despite mild dollar buying intervention by State-run banks, the rupee scaled a 24-month high of 46.90/91, buoyed by robust inflows from exporters, holding a distinctly bearish view of the dollar after the greenback's overnight slide to fresh 52-month low against the euro, a forex dealer said. Persistent dollar inflows against the backdrop of wide interest rate differentials between the U.S. and India would propel the rupee further upwards in the near future, he added.

The rupee spurted by 15 paise yesterday and scaled a 23-month closing high after breaching the crucial 47 a dollar barrier. It has appreciated by a whopping 45 paise in the last ten straight sessions and by about 111 paise in the current calendar year.

Traders expect the rupee to touch 46.70 a dollar in the next few days, if the current trend persists. But, the currency was still undervalued by over 2-1/2 per cent on a trade-weighted basis.

The Reserve Bank of India fixed the reference rate for the U.S. currency at Rs. 46.94 and for the single European unit at Rs. 54.77.

PTI

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