Rupee may fall further as US economy improves - Times of India

The rupee is likely to weaken on Monday because of better-than-expected news regarding the US economy this weekend. The author has posted comments on this articleTNN | Jul 7, 2013, 01.40AM IST MUMBAI: The rupee is likely to weaken on Monday because of better-than-expected news regarding the US economy this weekend. An improvement in the US economy is bad news for the rupee as this has revived fears of the Federal Reserve discontinuing its $85 billion-a-month bond buyback programme which may cause a pull out of dollars from emerging markets. A large number of bankers now expect the rupee to rule in the 60-plus range for the next week. However, the release of data during the weekend gives the RBI enough time to draw up a plan to prevent any sharp fall. In recent days, the central bank has cracked down on banks supporting speculative positions on the rupee. The RBI has also been selling dollars to support the rupee. Other options available with the central bank include opening a window to sell dollars to large government imports such as crude oil and defence equipment. Discontinuing the bond buyback will lead to leveraged funds - funds that have borrowed cheap money in the US to invest in emerging markets - pulling out money from India. Besides this, better-than-expected growth in the US would result in an improvement in returns from the US equities and bonds and lead to lower capital flows to emerging markets such as India. But economists feel the RBI's recent stance of trying to restrict what it feels is speculative trade may not work. "In terms of measures to stabilize the rupee, we note that the authorities have joined the recently-popular practice of restricting NDF (non-deliverable forward) market activities, which we find to be an unconvincing approach to stabilize the currency," said Taimur Baig, economist with Deutsche Bank, in a recent report. The US government released jobs data on Saturday that showed that employed soared in June. Payrolls rose by 1.95 lakh workers for a second month, the Labor Department reported in Washington, exceeding the 1.65 lakh projected by economists in a Bloomberg survey. Acco rding to economists, the rise in employment is an indicator that the US economy is poised to grow faster. via Business - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNE6DDlAXx-JfH2sX1ZmlGktSsjm-w&url=http://timesofindia.indiatimes.com/business/india-business/Rupee-may-fall-further-as-US-economy-improves/articleshow/20949487.cms

Put the internet to work for you. via Personal Recipe 2910127