Rupee touches new nine-year peak this week

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Mumbai, Oct 13: Heavy foreign fund inflows throughout the week provided a strong push to the spot Rupee which reached a new nine-year peak at 39.33 against the US Dollar.

Even though the Reserve Bank of India (RBI) continued its intervention by sucking out the excess liquidity in the foreign exchange market this week, the partially convertible Indian unit made a firm gain of about 15 paise against US dollar, dealers said.

Rupee started firm on the opening day of the week at 39.41 per dollar. From Monday to Wednesday, the Rupee was on the gaining side due to high inflows, dealers said. On Thursday, it was almost steady as RBI intervened by pulling out excess liquidity in the market. On Friday, it slightly weakened.

''It was expected that the Indian unit may end up much stronger touching at 38.00 level this week but the continuous intervention by the RBI supported Rupee a bit,'' said a senior dealer with a leading private sector bank.

Moreover, the local unit traded firm in a wide range of 39.28 to 39.55 per dollar this week. Strong rise in Sensex of 658 point this week, touching an all-time high and nearing the 19K mark due to excessive inflows of foreign funds, boosted the Rupee, he added.

Meanwhile, during the week the Central Bank, at its Liquidity Adjustment Facility (LAF) window, sucked out Rs 269,830 crore to drain out the excess liquidity in the market.

Rupee's sharp rise to a new nine-year high against US Dollar has definitely caused concerns this week, a senior dealer pointed out.

Equity inflows through Foreign Institutional Investors (FII) are much more higher and there is no slowdown in investment, which can further boost up the Indian unit against the US dollar, dealers opined.

UNI

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