Rupee scales 7-month high on account of strong foreign inflows

Financial Express, March 19, 2019
The rupee on Monday closed at a seven-month high of 68.53 against the dollar, after having appreciated 0.8% to an intra-day high of 68.44 during the session, primarily due to increased foreign inflows into equities and debt and a weakening greenback in the overseas market, said dealers.
Foreign portfolio investors (FPIs) have invested $4.2 billion in the Indian equity and debt markets this month (as on March 15) – the highest inflow in FY19. The dollar index that measures the dollar against six currencies fell by 0.15% to close at 96.44 from the previous close on Friday. FPIs were buyers for eight consecutive sessions in the equity market, according to depository data.
Kamal Mahajan, head of treasury and global markets, Bank of Baroda, said the gains in the rupee is just a function of short-term demand and supply and there have been no structural changes in terms of exports to boost the rupee. “The jump in the rupee is due to increased demand from investors which can keep changing and also there is some comfort on the political results front as there is some ease regarding chances of there being a hung Parliament.”
Also, the rupee tracked gains in most Asian and other emerging market currencies, which closed higher because of weakness in the greenback. The South Korean won, the Russian ruble, the Malaysian ringgit and the Indonesian rupiah closed 0.15-0.7% higher than their previous closes.
Meanwhile, the 10-year benchmark bond —7.17% yielding paper maturing in 2028 – closed Monday’s session at 7.48%, 2 basis points lower than the previous close.
FPIs had been sellers of bonds in January and February having net sold bonds worth $370 million in January and $1.3 billion in February. However, they have net bought bonds worth $1.2 billion and close to $3 billion in equities as on March 15.

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