Rupee may depriciateif debt inflows disappoint: credit suisse
Credit Suisse says that rupee may depreciate further hurting Indian equities and pushing back rate cuts if foreign debt inflows were to disappoint.
"With equity flows peaking, RBI has been steadily raising debt limits-a disconcerting sign. We believe debt flows may not rise fast enough to support the rupee," says investment bank in note. "With forex reserves down 6% and market turnover up 64% during the last three years, RBI's ability to intervene is much depleted," added the Swiss bank.
Notes, if the rupee falls, companies with un-hedged forex debt such as Aban Offshore and Bharti could see book value erosion.
House likes Infosys, TCS , Sun Pharma , Lupin and Hindustan Zinc for their rupee costs and US dollar revenues, and are still wary of rate sensitives such as ICICI bank , SBI and Maruti .
The rupee reversed its early losses to strengthen on Thursday, a day after posting its biggest single-day rise in 10 months, supported by gains in local equities and the euro.
At 10:50 a.m. (0520 GMT), the partially convertible rupee was at 48.94/95 per dollar, marginally stronger than Wednesday's close of 48.95/96.
The one-month onshore forward premium on the rupee was at 20.25 points from 19.25 on Wednesday, the three-month premium was steady at 57.00 points and the one-year premium was 125.50 points, from 120.00.
The one-month offshore non-deliverable forward contracts were quoted at 48.92, a tad stronger than the spot rupee rate.
In the currency futures market , the most traded near-month dollar-rupee contracts on the National Stock Exchange was at and those on the United Stock Exchange and the MCX-SX were at 49.03. The total traded volume on the three exchanges was $873 million.
"With equity flows peaking, RBI has been steadily raising debt limits-a disconcerting sign. We believe debt flows may not rise fast enough to support the rupee," says investment bank in note. "With forex reserves down 6% and market turnover up 64% during the last three years, RBI's ability to intervene is much depleted," added the Swiss bank.
Notes, if the rupee falls, companies with un-hedged forex debt such as Aban Offshore and Bharti could see book value erosion.
House likes Infosys, TCS , Sun Pharma , Lupin and Hindustan Zinc for their rupee costs and US dollar revenues, and are still wary of rate sensitives such as ICICI bank , SBI and Maruti .
The rupee reversed its early losses to strengthen on Thursday, a day after posting its biggest single-day rise in 10 months, supported by gains in local equities and the euro.
At 10:50 a.m. (0520 GMT), the partially convertible rupee was at 48.94/95 per dollar, marginally stronger than Wednesday's close of 48.95/96.
The one-month onshore forward premium on the rupee was at 20.25 points from 19.25 on Wednesday, the three-month premium was steady at 57.00 points and the one-year premium was 125.50 points, from 120.00.
The one-month offshore non-deliverable forward contracts were quoted at 48.92, a tad stronger than the spot rupee rate.
In the currency futures market , the most traded near-month dollar-rupee contracts on the National Stock Exchange was at and those on the United Stock Exchange and the MCX-SX were at 49.03. The total traded volume on the three exchanges was $873 million.
POSTED BY-JASLEEN KAUR
PGDM 1ST
This entry was posted on at 12:11 AM. You can follow any responses to this entry through the RSS 2.0. You can