Cash crunch pushes rupee to 19-mth high
MARKET ROUND-UP
| Companies may have paid as much as Rs 40,000 crore ($9.1 billion) in advance tax on March 15, according to estimates by traders surveyed by Bloomberg News. That pushed the overnight lending rates among the banks to this year's high at 19.5 per cent. |
| "There is preference for selling dollars because of the liquidity situation,'' said Vikas Babu, a trader at state-owned Andhra Bank in Mumbai. "Till the situation improves, which appears unlikely to happen in at least the next few days, we may see the rupee finding support at the current levels.'' The rupee gained 0.7 per cent to 43.7612 at close at 5 pm. in Mumbai, according to data compiled by Bloomberg. That's the highest close since August 26, 2005. |
| The currency fell in the forwards market. Investors who want to buy dollars a year from now in exchange for rupees have to pay 3.6 per cent more than the current exchange rate, compared with 3.2 per cent on March 16, Bloomberg data shows. The currency market in Mumbai, India's financial center,was shut yesterday on account of a holiday. |
| The currency pared gains on speculation that the central bank will sell rupees for dollars. A stronger currency makes goods and services more expensive for overseas buyers, slowing export growth. |
| "I think the levels are crucial, which increase the speculation of central bank intervention,'' said L.V. Prasad, chief currency trader at IndusInd Bank in Mumbai. |
| India's exports fell to $9.6 billion in January from $9.9 billion during the previous month, the ministry of commerce and industry said on March 1. |