No takers for dollar; Re hits high of 39.35

No takers for dollar; Re hits high of 39.35
2007-10-04 15:53:46 Source : Moneycontrol.com

The rupee hit a high of 39.35 to the dollar in intra-day trade, which is a significant appreciation in just one session. The domestic unit was bit on the front foot in early morning trade because yesterday in late trades it had surged suddenly, analysts said.

The rupee was expected to carry on with that in the morning. This carry on effect is usually there but there was a good bit of buying by oil companies, analysts said. Once that dried up, the dollar fell largely because there were no buyers, they added.

Treasury heads said it’s not that there are huge FII flows today, if any it doesn’t seem to be anything like it has been earlier this week, but the sheer absence of buying (read RBI) led to the dollar falling lower.

However, at 39.35 there seems to have been some concerted PSU bank buying, which has been given the name of RBI, treasury heads said. So, it looks like RBI is supporting the market at around 39.35.

Ashit Parekh of IndusInd Bank has a view that by the year-end rupee may touch 38.75.

Excerpts from the exclusive interview with Ashit Parekh:

Q: Re is at 39.35,what is the cause for this appreciation?

A: We saw strong recovery in stock markets, so that implied continuous inflows and hence we saw rupee appreciating to 39.35. From there a quick move to 39.48 happened because of some strong buying by PSU banks. But it is not sustainable at all as you can see we are back down to 39.42, which is 6 paise lower than the high.


Q: What would you advice an exporter at this juncture? Do you think there is a likelihood of any spike at all or do you think that they should use even at 39.48 to get rid of their dollars?

A: I am not too sure about 39.48 because this morning the high has been 39.62. Still all the spikes should be used to get out of long positions and it should be used to book some exporting.

Q: What kind of a range are you looking at for the dollar itself? Do you think you are going to see it at 39 before this month is out?

A: I am not too sure about the timing of that but yes, definitely 39 is vulnerable. We might see it dipping below 39.

Q: Any year-end levels?

A: 38.75 is possible, I am not saying it will go there. But 38.75 is possible.

Q: That’s December 31st?

A: Yes, before that.