In line with equity market, the rupee trimmed its initial losses but was quoted still lower by 17 paise on dollar demand from banks and importers despite weakness of the US currency overseas.
The Reserve Bank of India is expected to do a balancing act by further liberalising limits on the foreign exchange outflow to tackle the capital inflow and its impact on inflation. The central bank was likely to raise the limit on corporate investment abroad and the ceiling on individual remittances overseas. RBI has liberalised limits on the overseas investment by companies from 200% to 400% of their networth. Liberalisation is proposed since India has good forex situation.
Investment in the Indian capital markets through participatory notes slightly dropped to Rs 96,292 crore at the end of December 2022 from the preceding month on higher valuation of domestic markets. Before the decline, the investment through the route had been on an increasing trend since July because of a slump in prices of oil and other commodities and relative outperformance of Indian equity markets. Participatory notes (P-notes) are issued by registered Foreign Portfolio Investors (FPIs) to overseas investors who wish to be part of the Indian stock market without registering themselves directly.
Equity benchmarks mustered gains for the first time this week on Thursday as investors piled into the recently-battered metal, bank and IT stocks amid expiry of monthly derivative contracts. Snapping its three-session losing streak, the 30-share BSE Sensex rallied 503.27 points or 0.94 per cent to settle at 54,252.53. On similar lines, the broader NSE Nifty gained 144.35 points or 0.90 per cent to end at 16,170.15.
The rupee extended its fall for the fourth consecutive day by losing another 6 paise to hit a fresh one-month low of 62.31.
Finance Minister Arun Jaitley on Friday tabled the pre-Budget Economic Survey in the Lok Sabha.
The rupee had gained 90 paise, or 1.34 per cent.
The rupee on Monday dropped by 30 paise to 54.72 against the US dollar in late morning trade, due to on fresh demand for the American currency from banks and importers despite a weak global trend.
Dealers said besides increased dollar selling by exporters, a higher opening in domestic equity market and yen's gain against the American currency overseas helped the rupee to recover.
Falling for the first time in three days, the rupee washed out initial gains to end four paise lower at 62.57 today on caution ahead of US non-farm payrolls data and sustained capital outflows from Indian markets.
Erasing early gains, the rupee on Friday ended 15 paise lower at 54.37 on month-end dollar demand from importers and heavy capital outflows, amid weak local stocks.
Once we break free of the idea that land is scarce, real estate is just a pile of bricks, steel, and glass. Any price surge will kick off a supply response, which kills off the possibility of sustained price appreciation, points out Ajay Shah.
The rupee on Monday appreciated by 11 paise to 54.64 against the US dollar in early trade at the Interbank Foreign Exchange, aided by selling of the American currency by exporters and banks.
The US dollar bought 99.40 yen in Asian trade, compared with 99.21 in North American trade late on Monday.
The dollar index eased 0.05 per cent to 98.69.
The rupee edged higher by three paise to 66.46 against the US dollar in early trade on Wednesday.
The rupee lost 37 paise to end at 62.60 against the dollar on Tuesday following demand for the US currency and a fall in local equities on further rate hike concerns.
Net foreign direct investment (FDI) in India, inflows minus outflows, declined sharply in April-August this year to $2.99 billion from $18.03 billion in the same period last year on moderation in global activities and a rise in repatriation. The Reserve Bank of India's data (October 2023 bulletin) said FDI in India was $7.28 billion and FDI by India, that is money invested abroad from the country, was $4.28 billion in April-August 2023. As for 2022, FDI in India was $22.79 billion and FDI by India was $4.76 billion in April-August.
Extending losses for the second straight session, the rupee slipped by 11 paise at 66.54 against the US dollar.
On a weekly basis, the rupee fell by 1.36 per cent or 75 paise as dollar demand outweighed supply and stocks fell.
The reserves rose to $501.70 billion helped by a whopping rise in foreign currency assets, the latest data from the Reserve Bank of India.
Strengthening of euro against the dollar in overseas market and a higher opening in the equity market supported the rupee.
The dollar index was up by 0.04 per cent against a basket of six major global rivals.
With Indian stocks under pressure, the rupee tumbled to a low of 54.89 on emergence of dollar demand from importers and some banks on expectations of further rise in dollar overseas.
The rupee had gained 11 paise to end at one-week high of 54.84 against the US dollar in Wednesday's trade on sustained selling of the US dollar by exporters and capital inflows.
Foreign Portfolio Investors (FPIs) have pulled out over Rs 10,000 crore from Indian equities in the first three weeks of September, primarily due to rising US interest rates, recessionary fears, and overvalued domestic stocks. Before the outflow, FPIs were incessantly buying Indian equities in the last six months from March to August and brought in Rs 1.74 lakh crore during the period. Mayank Mehra, smallcase, manager and principal partner at Craving Alpha,believes that strong economic growth prospects, attractive valuations, and government reforms could support foreign investment flows in the next month.
Rupee fell to 45.03 in the Interbank Foreign Exchange Market against the dollar in morning trade today on worries of capital outflows which may increase because of equity sales by foreign investors.
Brokers said a weak trend in euro in overseas markets also dampened the rupee sentiment against the US dollar.
The NBFCs, which filed for ECB in January with the Reserve of India (RBI), include REC (over $500 million), Tata Motors Finance ($200 million), L&T Finance Holdings ($125 million), and Shriram Finance ($750 million), according to the RBI data. A senior executive with State Bank of India (SBI) said overseas borrowing by Indian companies, including highly rated NBFCs, was likely to grow because hedging costs were low and there was a softening bias in global interest rates.
In New York, the dollar slipped against the euro and other major currencies yesterday after the US economic data boosted equities.
Besides, steady euro against the American unit and a higher opening in the domestic equity market supported the rupee, forex dealers said.
Participatory Notes (P-Notes) are derivative instruments issued by FIIs to foreign investors -- individuals or corporates -- who want exposure to Indian equities, but do not want to register with Sebi.
The domestic currency has fallen past the 56-level against the dollar after June 29.
IT stocks on Wednesday rose as much as 3 per cent in an otherwise weak stock market after sentiments turned buoyant amid the rupee sinking to an all-time low of 60.35 against the dollar, as the stronger US currency boosts the sales of software firms in rupee terms.
Strong MF investments, stemming of FII outflows and positive earnings in Q3 have helped market, say analysts.
The government's step could push investors to choose riskier equity, or to fall back on bank deposits, thereby negatively impacting the debt market which actually needs to grow, points out T N Ninan.
At the Interbank Foreign Exchange market, the domestic unit resumed lower at 54.42 a dollar from overnight close of 54.26 and moved in a narrow range of 54.34 and 54.46.
Foreign institutional investors pulled out Rs 86.66 crore (Rs 866.6 million) from local stocks on Monday, as per provisional BSE data.
Exuding confidence that current account deficit (CAD) will come down to 3.7 per cent of GDP in 2012-13, Finance Minister P Chidambaram on Monday said overseas capital flows would be sufficient to bridge the gap in inflow and outflow of foreign funds.
Amid rupee sliding below 64 to a dollar, global agency Standard & Poor's on Tuesday said it will maintain negative outlook for the country as currency depreciation is adversely impacting investor confidence.
