Rupee up on day, but down sharply in 2008/09

Mumbai: The rupee rose nearly 1 per cent as shares gained on Tuesday, a small positive at the end of its biggest fiscal-year fall since the since the 1991/1992 balance of payment crisis on Tuesday.

The partially convertible rupee closed at 50.71/72 per dollar, 0.9 per cent stronger than its Monday's close of 51.17/19, but still lost 4 per cent in the March quarter.

"The rupee rose tracking the dollar's weakness against the G7 currencies and also the positive equity markets," said L. Subramanian, chief dealer with ICICI Bank.

The stock market rose 1.5 per cent, enough to propel it to its first quarterly gain since 2007 after easing concerns about the global economy revived investor appetite and sparked a worldwide rally in March.

The dollar lost ground against the euro on Tuesday with quarter-end flows overriding fundamentals even as markets geared up for a G20 meeting.

"The dollar index is quite bearish, so the rupee is expected to rise towards 49.78 in the near-term. But in the medium-term it is expected to be rangebound between 49.5 to 52.5," Subramanian said.

Fiscal year fall

The rupee dropped nearly 21 per cent in the 2008/09 fiscal year that ended on Tuesday, its biggest fall since the balance of payment crisis in 1991/1992 knocked it down more than 37 per cent against the dollar, according to Reuters data.

The currency has been hit hard by a large stream of capital outflows from the share market, a widening current and trade account deficit and a slowing economy.

Foreign funds have pulled out a net $1.5 billion from Indian shares in the first quarter of 2009. Last year, net outflows of more than $13 billion, had pushed the rupee down 19.1 per cent.

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In 2007, record inflows of $17.4 billion had helped drive the rupee up 12.3 per cent.

The current account deficit widened to $14.64 billion in the October-December quarter from a revised $4.53 billion a year earlier, the central bank said.

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