|
|
|
|
|
|
| |
| |
By Category |
 |
|
|
| |
|
| |
| |
India On Media |
|
|
|
| |
|
| |
|
|
| Money
News |
|
| Rupee Rise against US Dollar |
| India rupee showing new muscles
|
| KUWAIT
, 23-April-2007
3:38:35 AM |
| India's rupee is showing new muscle as it scales nine-year highs against the US dollar, alarming exporters who sell most of their goods to the US.
India's Federation of Indian Export Organizations says the appreciation of the rupee has "severely eroded the profitability of exporters."
The partially convertible rupee has risen by around 11 percent against the US dollar since last July, helped by inflows from investors eager to invest in India's booming economy.
"Its appreciation reflects the underlying strength of the Indian economy and, of course, [broad-based] dollar weakness," said Deepak Lalwani, director at London-based Astaire Securities.
But until lately, dealers say, the central bank had been intervening by selling rupees to make sure the Indian currency does not rise too quickly, and to keep a lid on export prices.
Now though, market players say, the Reserve Bank of India (RBI) has eased off from intervention as it seeks to wrestle down inflation in Asia's fourth-largest economy, which is growing by around 9 percent.
"The bank has its eye firmly on [capping] inflation," said DK Joshi, principal economist at Indian credit rating agency CRISIL.
Letting the rupee rise has made imports less expensive, cushioning the impact of strong fuel prices for India, which relies heavily on imported oil which is priced in US dollars.
By not selling rupees to buy US dollars, the bank also has not added to rampant money supply growth which has been helping fuel inflation.
After dipping briefly this month, Indian inflation crossed six percent again last Friday to hit 6.09 percent, despite a slew of monetary tightening measures.
Inflation is now more than half a point above the central Reserve Bank's ceiling of 5.5 percent.
Economists expect the rupee's firmness to continue at least as long as inflation remains above target.
"We expect the rupee to benefit from both rising interest rates and the shift in policy focus of the RBI solely toward in
|
|
|
|
|
|
|
|
ADVERTISEMENTS
Free offer!!! Become an administrator for your zip home page, "Post" local news (local to your postcode)& pictures, "Post" advertisement banners from local companies. Make Extra money.
|
 |
 |
|
|
| |
|
