Rupee completes first quarterly gain against dollar in a year
The currency gained 0.9% since 31 December to close at 62.4975 a dollar in Mumbai
Mumbai: The rupee completed its first quarterly gain in a year on optimism the nation’s improving economic outlook will attract more inflows.
Asia’s third-biggest economy will probably grow 8.2% in the year starting 1 April, the Asian Development Bank forecast on 24 March. That compares with a government estimate for 7.4 expansion this year and would be the fastest among major nations. Foreign funds have pumped $12.6 billion into local stocks and bonds in 2015, data compiled by Bloomberg show.
The rupee gained 0.9% since 31 December to close at 62.4975 a dollar in Mumbai, prices from local banks compiled by Bloomberg show. The currency rose 0.3% Tuesday and fell 1% in March.
“In the emerging-market space, India is one of the best shining stars and that’s attracting a lot of capital inflows," said N.S. Venkatesh, the Mumbai-based head of treasury at IDBI Bank Ltd. “The currency has been stable with the current-account and fiscal deficits being managed well and that has put India into a big sweet spot."
The Reserve Bank of India predicts the shortfall in the broadest measure of trade will be 1.3% of gross domestic product in the year ending 31 March, the lowest since 2008, as a 48% drop in the price of Brent crude over the past year cuts costs for the nation that imports about 80% of its oil. The fiscal deficit in the period will be 4.1% of the GDP, the lowest in seven years, the government forecasts.
Indian sovereign bonds rallied for a fifth quarter as easing consumer-price inflation gave the central bank room to cut interest rates by 50 basis points. The RBI next reviews its monetary policy on 7 April.
The yield on the notes due July 2024 fell 12 basis points, or 0.12 percentage point, this quarter to 7.74%, according to prices from the RBI’s trading system. The yield dropped two basis points Tuesday.
“The RBI is likely to cut rates by another 50 basis points by the end of this year and that will keep the positivity around bonds intact," said IDBI’s Venkatesh. The yield on the benchmark 10-year debt may drop to around 7.25% by year- end, he said. Bloomberg
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