CNBC to speak on Rupee forex trading freely on US exchange

The rupee on Wednesday appreciated modestly by four paise against the US dollar in morning deals, buoyed by a rise in equity markets and reduced dollar demand from oil companies.

In quiet trade at the Interbank Foreign Exchange (forex) market, the local currency resumed better at 39.76/78 a dollar from Tuesday close of 39.7750/7850 a dollar and later improved to 39.7300/7350 a dollar in late morning deals.

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The rupee drew support from buoyant equity market, which rose by 189 points to touch 19,316.76 points this morning from yesterday's close, forex dealers said.

They said oil refiners, which have been consistent buyers in dollar in the last few days, were virtually absent in early trade.

Buoyed by a strong surge in equity markets, the rupee appreciated by nearly 8 paise against the US currency in morning trade even as dollar weakened against major currencies in the international market.

In quiet trade at the Interbank Foreign Exchange (forex) market, the local currency resumed firm at 39.70/71 a dollar from overnight close of 39.80/81 a dollar and later moved in a range of 39.68-39.74 in the initial 30 minutes of trade.

The rupee was quoted at 39.7250/7300 a dollar in late morning deals. The activity was largely influenced by a sharp rally in Asian, including India, bourses, forex dealers said.

Traders, however, anticipated the central bank intervention later in the day as the rupee breached 39.70 level despite fairly heavy capital outflows and weak dollar overseas.

The BSE benchmark Sensex today gained 358 points during morning trade to touch 19,297.10. The Asian indices were up in a range of 1.75 to 4.25 per cent in early trade.

India's rupee snapped the longest losing streak since June 2004 on speculation exporters took advantage of the eight-day decline to convert earnings.

The currency gained the most in more than a month after falling to a five-week low yesterday. The rupee also advanced on optimism gains in the nation's benchmark share index this week will prompt global funds to slow sales of local equities.

``It's an opportunity for exporters given the underlying view that the rupee will rise in the longer term,'' said Amit Garg, a trader at state-owned Allahabad Bank Ltd. ``The rupee may remain strong in the next few days.''

The rupee gained 0.3 percent to 39.665 against the dollar as of 12:43 p.m. in Mumbai, according to data compiled by Bloomberg. This is the biggest gain since Oct. 23.

The median estimate in a Bloomberg News survey of 18 economists and currency strategists is for the rupee to strengthen to 39 by the end of 2007. The Indian currency's 11.5 percent gain this year is the second-best performance among Asian currencies after the Philippine peso.

Exporters may have bought the rupee, which is headed for its first monthly loss since August, on speculation it will rebound. Tata Consultancy Services Ltd., India's biggest software exporter, expects the rupee to advance to 39.50 rupees.

``The fundamentals are still for appreciation'' of the rupee, Tata Consultancy's Chief Financial Officer S. Mahalingam said in an interview with CNBC-TV18 yesterday.

Costlier Oil

The rupee's gains were limited by concern crude oil prices near a record will inflate India's import costs, widening its trade and current account deficits.

``Oil prices have come off record highs but may remain at elevated levels on expectations of a strong winter in the U.S., thus posing a significant risk for the rupee,'' Siddhartha Bhotika, Mumbai-based currency economist at ICICI Bank Ltd., said in a research note dated Nov. 26.

Asia's third-largest economy imports three-quarters of its energy needs. Crude oil, which touched a record $99.29 a barrel on Nov. 21, has gained 54 percent this year.

Accelerated gains in crude oil may affect India's currency and current account deficit, the Reserve Bank of India said in its annual banking report yesterday.

The nation's current account showed a shortfall of $4.69 billion in the three months through June, compared with a surplus of $2.56 billion in the previous quarter, according to central bank data. The trade shortfall averaged $6.2 billion a month in the fiscal year started in April, from $4.3 billion in the year-earlier period, according to government data.

Stock Gains

The rupee also advanced on optimism overseas funds may reduce sales of local equities following gains in the stock market this week. The Bombay Stock Exchange's Sensitive Index gained 2 percent this week, after falling 4.3 percent last week.

Funds based abroad bought local shares for the first time in seven days on Nov. 26, data from the Securities and Exchange Board of India show. Such funds have sold shares worth an average $64 million a day this month.

``The rupee has gained as dollar supplies have improved,'' said Paresh Nayar, chief foreign exchange dealer at the Development Credit Bank Ltd. in Mumbai. ``There are some inward remittances coming through a few foreign banks. Stocks are also higher today.''

The Rupee will be shortly trading on US markets, waiting for the CNBC news story as I type.

Rupee / US Dollar Forex Currency News, Gold in India, and The Sensex index on the Bombay Stock Exchange (BSE). Euro / Rupee and Yen / Rupee.