Rupee hopes hinge on FII
12 August 2004
market is looking hopefully at the only positive news
to come for now, the foreign funds inflow on account
of Tata Consultancy Services' (TCS) public offering.
Other than this everything is adding to gloom: rising
inflation to 7.51, surging oil prices, poor economic
reforms, depleting dollar reserves. TCS (a Tata company)
is one of India's top software exporters. It raised
Rs 5420 crore in the IPO which is the largest ever in
the rupee was quoted at 46.31 per dollar close to its
previous close. RBI intervention is another determining
factor that is keeping the rupee from depreciating and
reflecting its true value at the moment.
US budget deficit widened to $396 billion last month.
On a monthly basis, the deficit increased by $69.2 billion.
Revenues increased 8.8 per cent, while spending increased
15 per cent. More specifically, military costs accounted
for the biggest dollar increase in spending. US Treasury
auction received moderate demand - the government needs
to continue to sell debt in order to fund the deficit.
expected, the euro extended yesterday's losses against
the Bank of England signalled that their tightening
cycle could be coming to an end. The central bank has
raised rates by 125bp indicating the economy is being
slowed down. There are expectations of one or two more
rate hikes soon. The sterling is currently ranging around
The yen, now at 110.80 per dollar is falling. Japan's trade surplus increased while the current account surplus surged 31.9 per cent to a record high of ¥9.64 trillion. Mainly attributed to falling Japanese exports to the US.