Rupee at 46-month high

Re recorded its highest weekly gain in more than 6 years.

The rupee yesterday further extended its gains against the dollar to end at a 46-month high of 44.47/48 on the back of buoyant inflows and positive export data. On Thursday, the rupee had closed at 44.7400/7450.
 
The rupee, which has now appreciated by more than 2.5 per cent in the first three months of 2004, last closed higher at 44.3700/3800 on May 26, 2000.

RBI Governor YV Reddy again reiterated that the rupee was being driven by market demand. According to him, the rupee's movements are being influenced by global currency movements and that the rupee has been relatively stable. He was speaking to reporters at a function at the RBI's headquarters here.

Bank of India's General Manager (treasury) G Narayanan said there was ample scope for the rupee to appreciate further. Given the inflows, he expects the spot rupee in the short term in the range Rs 44-44.10 to a dollar.

K Harihar, treasury head of Development Credit Bank, said the gentle appreciation of the rupee would continue given the cushion of FII inflows, FDI capital flows and exports.

Even though the rupee would face a strengthening bias, there would be persistent importer demand that would keep it rangebound at 44.25-75 per dollar, he said.

Export data released on Thursday said Feburary recorded a rise of 34.9 per cent year-on-year basis as against 8.7 per cent in January, despite an appreciation of the spot rupee. Imports, on the other hand, surged 44.5 per cent in February 2004 over the same month last year.

Forward premia continued to firm up, though marginally, supported by importer hedging and swaps done by PSU banks.