Positive sentiment gears rupee

By Geeta Parthip | 13 Aug 2004

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Rupee continues to feel positive with the expected inflow of foreign funds, on account of the TCS IPO. Today the rupee touched 46.19. The positive sentiment is also attributed to the strong support of the RBI. Inflation of 7.51 per cent and the slow economic reforms are for now in the background and will deflate the rupee's rise only if TCS is not able to attract enough funds from the world.

The rising crude oil price is another bothering feature of the world economy today. They especially cause concern to the rupee as we import about 70 per cent of the oil we use and it constitutes about 30 per cent of our import bill. Currently, oil price has reached $45 a barrel. Even Saudi Arabia's announcement of spare oil has failed to curb price gains. The global economy and the world's central bankers are now at the mercy of oil.

The US retail sales data released being below expectations has caused the dollar to weaken against other currencies. Greenspan's words of hope have not been quantified this week.

Mixed developments in the Euro zone today failed to garner much momentum for the euro. French consumer spending increased 4.2 per cent. The French economy is sending more positive signals than that of Germany. The euro had a brief spike up reaching 1.2202 following the weak US retail sales report.

The dovish inflation report released by the Bank of England on Wednesday has put a bias on the pound. The British pound is now at 1.8179 up from 1.8135. This move also reflects the recent dismal US retail sales data. Until any further data comes in which is not expected this week the sterling might just rally in the range.

The yen at 111.65 still feels the oil price pressure as its economy relies on imported oil heavily. In addition the economy is also not doing very well currently.

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