Business | Economy
Indian rupee snaps three days of losses
India's rupee rose, snapping three days of losses, on speculation exporters bought the currency after it slumped to a six-month low.
- Bloomberg
- Published: 00:10 March 19, 2008
Mumbai: India's rupee rose, snapping three days of losses, on speculation exporters bought the currency after it slumped to a six-month low.
The rupee, the second-worst performer among the 10 most-traded currencies in Asia this year, rebounded after capping the biggest loss in two weeks on Tuesday.
A weaker currency boosts exporters' income when they repatriate earnings from overseas. The rupee also advanced on speculation some investors sold dollars to guard against further losses before the Federal Reserve cut its benchmark rate yesterday.
Not in favour
"The dollar is clearly not in favour with exporters and investors," said Sudarshan Bhatt, chief currency trader at state-owned Corporation Bank in Mumbai. "They are looking at every opportunity to sell, which will benefit the rupee."
The rupee gained 0.5 per cent to 40.515 per dollar at the 5pm close in Mumbai, according to data compiled by Bloomberg. The advance was the most since February 21.
The currency's 12.3 per cent rally in 2007, the most in at least 34 years, hurt profit margins at companies including Tata Consultancy Services Ltd, India's biggest software exporter. Growth in India's goods exports slowed to 17.7 per cent a month in 2007 from 21.2 per cent in the previous year.
A rate reduction by the Fed may also add to losses in the dollar, which on Tuesday fell to a record against the euro and the Swiss franc and to a 12-year low versus the yen.
Futures traders are putting a 100 per cent chance on the Fed lowering the target rate by at least one percentage point to two per cent, the biggest reduction since 1984.
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