Rupee recovers 22 paise as market sentiment improves

MUMBAI: The rupee recovered from a three-week low on Friday, as markets pulled back from a sharp intra-day fall. The local currency ended 22 paisa lower at 46.67 almost level with its close to last week. The rupee fell to a low of 47.07, as the share market benchmark BSE Sensex fell as much as 3.8%, but local sentiment improved as a number of companies said they had no material exposure to Dubai .

Dubai has shaken financial markets since Wednesday, when it said two flagship government-owned firms planned to delay repaying billions of dollars in debt. State-backed Dubai World has $59 billion of liabilities as per reports.

“From an India perspective, the exposure of Indian companies to Dubai appears to be very limited,” said Ashutosh Datar, strategy analyst of IIFL, the institutional equities arm of India Infoline.

“While in the near-term, risk appetite might wane and capital might flow towards safe haven assets like the US treasuries, but once the dust settles, the medium-term story of capital flows into emerging markets will continue
due to their robust fundamentals,” he added.

The yen hit its highest level in 14 years on the dollar on Friday and also jumped against the Australian dollar and higher-yielding currencies, as stocks fell on concerns about debt problems in Dubai. The dollar fell to 84.82 yen before rebounding back above 85.00.

Agencies reported that Japanese finance minister Hirohisa Fujii said currency moves were now extreme and that it was possible to take appropriate measures helped lift it, but the impact was shortlived. Dollar index, gauge of the dollar’s movement against six majors, rose 0.6%. Government bonds ended unchanged on Friday, which did not see any government bond auctions.