Rupee strengthens by 21 paise for the week

Mumbai, July 8: Rupee strengthened by 21 paise in the past week and continued to be the strongest Asian Currency.

Kicked off the trade at a moderate 40.65/66 per US Dollar on Monday, the unit gathered momentum in following consecutive sessions, to break the psychological barrier of 40.50 on Wednesday to close the week's trade at 40.44/45 paise.

However, a massive appreciation in currency continues to haunt export-oriented players in the industry who have tasted losses due to the appreciation.

''The strong Rupee has virtually brought a major hit to the entire industry, which has already tasted bitter from the interest rate hikes in last 6-8 months. Government and the Reserve Bank of India (RBI) must come forward with supportive initiatives and concessions,'' said Indian Merchants Chamber President Niraj Bajaj to sources.

The Reserve Bank is believed to have intervened in Forex market last week to buy dollars to block further hike in Rupee rate, after foreign inflows hit stocks largely, making it touch an all time high of 15,000 points at 1319 hours on Friday.

''Rupee is likely to gain more and more from overseas investments in the week ahead which may take Rupee to 40.20-30 margins if Reserve Bank permits it to rise. However, Rupee's upward move will be gradual,'' said Sudharshan Bhatt, Chief Forex Dealer, Corporation Bank.

External Commercial Borrowings (ECBs) by Indian companies rose to USD 16.08 billion for the fiscal ended March 2007 from the past year's margin of USD 2.7 billion.

Country's foreign reserves touched USD 213.486 billion from USD 212.549 billion in the previous week while Foreign Currency Assets stood at USD 206.114 billion, according to the RBI weekly report.

India has a reserve of USD 460 million in the International Monetary Fund (IMF), which is up by one million from the previous week.

The week has also seen a marginal increase in the inflation rate which rose to 4.13 per cent for the week ended June 23 from 4.03 per cent past week.

UNI