Re posts biggest decline in 6 mths on euro zone crisis
The rupee appreciated slightly on Tuesday against the dollar to 45.88 but the currency ended November with its biggest monthly decline since May , 2010 on concern that Ireland?s debt crisis will spread to other European countries, damping demand for riskier emerging-market assets. The rupee slid 3.3% this month, making it the worst performer among the 10 most-traded Asian currencies excluding the yen, according to data compiled by Bloomberg.
The rupee reversed Monday?s losses after the government report on Tuesday showed economic growth in the September 2010 quarter, at 8.9%, beat economists? estimates. On Monday, dollar buying in the market to settle import bills had weakened the Indian currency by a good 10 paise. The rupee had given up 1.55% in eight sessions till Monday with equity markets a tad weak. Says Hitendra Dave, Head, Global markets, HSBC, ?In the short run, the rupee is getting impacted on account of a weak equity market and the dollar gaining against other majors. However, we expect the the depreciation to be relatively less over the longer run.?
The rupee closed at at 45.88 on Tuesday against the greenback, as compared with 45.93 on Monday. Observes Hemant Mishr, Head, Global Markets, Standard Chartered ?Our sense is that risk appetite has taken a back seat at this time of the year with the problems in the EU, the China rate hike and tension in Korea. So the rupee could come off to Rs 46.15-46.20 levels. The FII debt window will see some flows, so to that extent, the rupee will be buffered.?
The rupee has been volatile throughout 2010. At the start of the year, it was trading at Rs 46.32 and, by mid-April, had strengthened to Rs 44.40. Just when the market believed it would touch 43-43.50, it started weakening once again. By mid-May, the rupee had dropped back to Rs 47.70 and in one single day on May 25, was cheaper by almost a whole rupee. The currency then recovered to Rs 46.17, having lost nearly 4.3% in a single month in May. However, it later began to weaken following the uncertain economic outlook for major developed countries and turned only after mid-September. Post the Coal India issue, the rupee once again started gaining momentum. So far, foreign investors have pumped $28.73 billion into Indian stocks this year and a record $10 billion into bonds.
(With inputs from Agencies)
