Monday, October 25, 2004
Bloomberg
Indian Rupee May Rise on Speculation Central Bank Will Buy It
India's rupee may gain for a second week on speculation the central bank will buy the currency to reduce funds in the banking system to curb inflation, according to a Bloomberg News survey of traders.
The rupee rose for three of the past four weeks. Wholesale price inflation has remained above 7 percent for the past 15 weeks, more than the central bank's target of 5 percent by March 31. The Reserve Bank of India sold a net $876 million of foreign currency in August, the fourth successive month it was a net seller, according to its monthly bulletin for October.
"We'll be buying rupees on speculation the Reserve Bank wants to reduce the amount of currency in the banking system,'' said Amit Bansal, head of treasury at the Indian unit of Barclays Bank Plc in Mumbai.
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