|
|||
HOME | MONEY | REUTERS | REPORT |
August 1, 2000
BUDGET 2000 |
Rupee hit by imports, FII sales, says CRISILThe Indian rupee's fall to a record low against the dollar on Tuesday was triggered by pressure of consumer and industrial imports and equity sales by foreign funds, a top official of the Credit Rating Information Services of India Limited said. "In the last list of quantitative restrictions, a lot of consumer and trade related imports were allowed. My feeling is that there is more of consumer items which are being imported than industrial goods," R Ravimohan, CRISIL's managing director said. "I think that the market is only traditionally looking at the oil and fertiliser kind of imports," he said. The Indian rupee hit a new intra-day low of 45.15 in late morning trade, after slipping from opening levels of 45.03/05. Dealers said the rupee fell due to an unexpected bout of panic dollar buying after a large state-run bank bid for the US currency. The rupee had breached the 45 per dollar level on Monday, a little over a week after a central bank support package rescued it from its first dip through the psychologically key level. India in late March scrapped import curbs on more than 700 items, rationalised export incentives and liberalised imports of capital goods to bring itself closer with the WTO. Ravimohan said interest rate hikes in the United States and globally had also substantially softened the invisible flows as well as deposits by expatriate Indians. India's trade deficit widened to $2.98 billion in April-June against $2.37 billion in the year-ago period. Imports rose 27.25 percent to $13.18 billion in April-June 1999 while exports rose 27.65 percent to $10.19 billion from $7.99 billion in the year-ago period. Foreign funds turn net sellers Foreign institutional investors, in the last two months have unwound a third of the net investments made in Indian shares in the preceding five months. "The pull-out by foreign institutional investors has also been a major factor. Even though our exports have been good, it is still not enough to take both these negatives into stride," Ravimohan said. India's benchmark Bombay Stock Exchange index, the Sensex, has fallen by over 30 per cent since it touched a record high of 6,150.69 points in February this year. Analysts said foreign fund have been cutting their holdings in India due to overexposure in some sectors and as other Asian markets become increasingly more attractive. "I think the market has not fully understood the effect of foreign funds activity," Ravimohan said. Latest data from the Securities & Exchange Board of India shows that foreign funds were net sellers of $554.4 million in June-July compared to net purchases of $1.66 billion between January and May. "Compared to fairly strong inflows last year, there have been some outflows this year. This is a big swing factor for the markets," he added.
|
||
HOME |
NEWS |
MONEY |
SPORTS |
MOVIES |
CHAT |
INFOTECH |
TRAVEL SINGLES | NEWSLINKS | BOOK SHOP | MUSIC SHOP | GIFT SHOP | HOTEL BOOKINGS AIR/RAIL | WEATHER | MILLENNIUM | BROADBAND | E-CARDS | EDUCATION HOMEPAGES | FREE EMAIL | CONTESTS | FEEDBACK |