Good times ahead for the rupee

NEW DELHI: If you flinch every time you see the sharply fluctuating rupee-dollar exchange rate, you have reasons to cheer now.
The Indian unit, used to a great deal of battering vis-Ã -vis the US dollar, is likely to close this year unchanged --at about 48.20-levels. The rupee had opened January 2002 at 48.20/21.
This, in itself, is an unusual event in the domestic forex market.In calendar years 2000 and 2001, the rupee had dropped 7.43 per cent and 3.28 per cent respectively. Seen in this light, calendar year 2002 has been a good year for the rupee - so far.
What''s more, the Indian unit is likely to be rock-solid over the next one year too, say senior forex dealers.
A recent poll conducted among 24 banks by forex brokerage firm eMecklai says that the rupee is unlikely to cross the 50-mark for at least another year. This definitely is good news for Indian imports and students going abroad for studies.
While the poll average points at the rupee touching 49.49-levels by October-end 2003, the highest expectation among the respondents for October 2003 places the rupee at 50.25 by the end of that month. The lowest expectation pegs the rupee at 48.75.
As of date, the Indian rupee is being helped by the global weakness in the US dollar and a lack of demand. Some forex dealers believe that the rupee would have comfortably breached the 48.15-levels last week if the continuous buying of dollars by banks at mid-48.20s hadn''t happened.
The rupee in recent weeks has also firmed up in the absence of war fears in the Gulf.
Some recent announcements by the Reserve Bank of India are also helping matters. RBI first set into motion steps to introduce rupee derivatives into the market in a phased manner, and then followed it by allowing foreign institutional investors to take forward currency cover for their entire exposure in Indian equities. Sentiment, naturally, received a boost.
Two other factors like the RBI raising the ceiling on advance dollar purchases by importers to $1,00,000 from $25,000, and Moody''s hinting at an upgrade of India''s foreign currency debt rating are also helping matters.
Get ready for the good times ahead.