Financial Daily from THE HINDU group of publications
Friday, Jul 22, 2005
Financial Daily from THE HINDU group of publications Friday, Jul 22, 2005 |
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Money & Banking
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Forex Yuan effect: Rupee may strengthen Our Bureau
Mumbai , July 21 THE revaluation of Chinese yuan is expected to strengthen the rupee and other Asian currencies. According to analysts, the appreciation of rupee is unlikely to affect Indian exports. On Thursday, the rupee gained 30 paise in the last hour of trading post the revaluation announcement. Other Asian currencies such as yen gained against the dollar and euro after China said it has given up the US dollar peg. Following media enquiries, after the Chinese revaluation of its currency, the RBI issued a press release saying, "On a careful review RBI reiterates the continuation of the current exchange policy which has been enunciated in the Annual Policy for 2005-06." Mr Sudhir Joshi, Treasurer, HDFC Bank, said, "The artificial pegs put by various countries is going away and we are moving towards a more market oriented regime." The rupee is likely to appreciate in the long term, said Mr Natraj Rao, Chief Dealer (Forex), Centurion Bank. "This move will help our country considering that oil prices are rising. However, exporters may be of the opinion that government should support the local currency, as they will lose if the rupee appreciates," he said. It is unlikely that the regulator, in this case, Reserve Bank of India, will intervene this time around, as this move was expected. Mr L.V. Prasad, Head Sales, Treasury, IndusInd Bank, said, "The rupee is going to appreciate a little more and RBI will not mind because of the high oil prices and all South-East Asian currencies are likely to appreciate. The rupee will continue to be competitive against other Asian currencies." The rupee may even touch levels of 43-43.10 next week, said dealers. There is no need for Indian exporters to fear as the rupee will not mimic yuan in all respects and its appreciation will be subdued, dealers said. The Indian steel manufacturers, who export to China, are looking at enhanced net realisation in the short term. According to Mr Ankit Miglani, Director, Uttam Galva Steels Ltd, for whom Rs 1,400 crore, out of total income of Rs 2,200 crore, came from exports, revaluation of Chinese yuan will also mean increased tonnage in the long term.
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