The Hindu Business Line : Rupee gains more, closes at 40.9

Mumbai April 25 For the forex markets, the rupee is the favoured currency with the greenback losing all flavour. The domestic currency gained muscle to close at 40.89/90 against the dollar— a nine-year high. Seemingly, there is a scramble for rupees with exporters dumping dollars.

The rupee has not looked back since March 5 when it was at 44.63 and has gained by around Rs 3.70 in the past one and a half months.

The domestic currency opened on Wednesday at 41.10, touched an intra-day high of 40.87/88 and finally closed the day at 40.89/90.

"The market perception is that the RBI's focus is on inflation and liquidity management and will hence not be immediately seen intervening in the forex market," said Mr RVS Sridhar, Vice-President, Treasury, UTI Bank.

Earlier in the day, Dr Y.V. Reddy, RBI Governor, said, "We do not have a particular band for exchange rate for rupee. It is market determined. But we certainly would like to avoid excess volatility."

Mr Reddy added, "What was considered as volatility three years back is flexibility now."

Talking to Business Line, he said the exchange rate policy could not be based on the interests of either exporters or importers, though policy makers could not be insensitive to their concerns.

Analysts say that the core stance of the RBI to rein in the appreciating rupee seems to have undergone a change. RBI is believed to have bought $8 billion from November to January and around $12 billion in February in the forex market.

"Heavy dollar inflow and selling pressure from exporters has pushed the rupee to end higher. Besides, globally other major currencies are also strengthening against the dollar," said Mr K. Harihar, Head Treasury, Development Credit Bank.

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