Pent up dol­lar de­mand by jewellers likely to ex­ert pres­sure on ru­pee

The Pak Banker - - MARKETS/SPORTS -

Pent up de­mand for US dol­lars by the jewellery sec­tor, cou­pled with a weak Chi­nese yuan, are ex­pected to ex­ert pres­sure on the In­dian ru­pee dur­ing the up­com­ing week, ex­perts said today.

"Keep an eye out for the bul­lion users, as once they get back to work, we can see a lot of pent up de­mand from these guys to emerge. This de­mand, along with de­mand from cen­tral bank can ex­ert an up­ward pres­sure on dol­lar/ru­pee (pair)," Anindya Ban­er­jee, as­so­ci­ate vice pres­i­dent for cur­rency de­riv­a­tives with Ko­tak Se­cu­ri­ties, told IANS. A size­able sec­tion of jewellery in­dus­try play­ers have been on strike against a pro­posed one per cent hike in ex­cise duty on non-sil­ver jewellery in the union bud­get for 2016-17.

They have been on strike since March 2. The cen­tral gov­ern­ment has con­sti­tuted a panel to look into their de­mands. "Chi­nese yuan has be­gun weak­en­ing which should be an added neg­a­tive for ru­pee as well. We see USD/INR trade be­tween 66.30-50 and 67.00/67-20 lev­els for the next week," Ban­er­jee cited.

Ac­cord­ing to Ban­er­jee, de­spite a mid­week sell-off to­wards 66.93, ru­pee man­aged to close nearly flat, due to re­lent­less sell­ing of US dol­lars from fronts like IT (in­for­ma­tion tech­nol­ogy) com­pa­nies.

"De­mand for US dol­lars from RBI (Re­serve Bank of In­dia) has man­aged to build a floor un­der the US dol­lar for the mo­ment, around 66.40-50 lev­els on spot," Ban­er­jee elab­o­rated. "How­ever go­ing into the fi­nal quar­ter of the year, we can see more sell­ing from large ex­porters."

Dur­ing the trun­cated week ended March 23, the ru­pee weak­ened by 12 paise. The do­mes­tic cur­rency mar­kets were closed on Thurs­day-Fri­day, on ac­count of Holi and Good Fri­day.

On a weekly ba­sis, the ru­pee weak- ened by 12 paise to 66.62-63 (March 23) against a US dol­lar from its pre­vi­ous close of 66.50-51 (March 18) to a green­back.

Other an­a­lysts, at­trib­uted the ru­pee weak­ness on a strong US dol­lar. The US dol­lar has strength­ened on the back of in­creased chances of a hike in US in­ter­est rates in April. Even the Brus­sels at­tacks led in­vestors to park their funds in safe as­sets like the US dol­lar.

Anand James, co-head, tech­ni­cal re­search desk with Geo­jit BNP Paribas Fi­nan­cial Ser­vices, said: "The US dol­lar rose due to its ap­peal as a safe haven as­set, push­ing ru­pee to­wards the 67 mark." How­ever, there was an in­creased in­flows by the for­eign in­vestors in the coun­try's eq­uity and bond mar­kets. The Na­tional Se­cu­ri­ties De­pos­i­tory Lim­ited (NSDL) fig­ures showed that the FPIs (For­eign Port­fo­lio In­vestors) bought Rs63.41 bil­lion or $952.79 mil­lion in the eq­uity and debt mar­kets from March 21-23.

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