| Date: |
16-09-2013 |
| Subject: |
Rupee soars to 62.50 per dollar, Sensex jumps 350 points |
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The Indian rupee rose to 62.50 per dollar, while the BSE Sensex jumped over 350 points on Monday tracking global cues. The rupee tracked the dollar, which weakened after Lawrence Summers dropped from the race to be head of the Federal Reserve.
Deven Choksey, managing director of KR Choksey told NDTV that the Fed may not announce a tapering immediately, which will help market sentiments.
The partially convertible rupee traded 1.5 per cent higher as against Friday's close of 63.49. The Sensex traded above the key 20,000 mark, while the Nifty surged over 100 points to edge above the 5,950 levels.
Summers' surprise decision comes just before the Fed's meets on Tuesday and Wednesday to decide when and by how much to scale back its asset purchases from the current pace of $85 billion a month.
Markets had perceived Summers as less wedded to aggressive policies such as quantitative easing and more likely to scale it back quicker than the more dovish Jenneyt Yellen, who is currently second in command at the Fed.
Emerging Asian currencies have been under pressure with investors trying to guess how much the Fed will cut its monetary stimulus next week. However, disappointing U.S. data recently has led to hopes that the Fed may limit its stimulus withdrawal.
India is particularly vulnerable to any tapering as it suffers from both a large current account deficit and a fiscal gap.
Locally, RBI chief Raghuram Rajan will detail his first monetary policy review on September 20 which will be closely watched to see whether the central bank will give any signs of when it plans to begin withdrawing its cash tightening steps it launched in mid-July to stabilise the rupee.
"In the Reserve Bank monetary policy review later this week, CRR or cash reserve ratio could be brought down, easing liquidity, and will be a boost for banking stocks," Mr Choksey said.
Last week, the rupee saw its best week in nearly fifteen months as foreign funds flowed into equities on the back of a rebound in risk assets as geopolitical risks abated.
Progress on Syria also shored up risk appetite.
Source : profit.ndtv.com
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