statesman news service
MUMBAI, 12 JUNE: In a big relief to the government the global rating agency Fitch revised India’s outlook from “negative to stable” in its fresh report released after the closing of stock markets on Wednesday. The instant positive impact of the late afternoon development was felt on the currency market where the beleaguered partially convertible rupee appreciated significantly in final deals against the American dollar. It ended the day up 60 paise at 57.79 against Tuesday closing of 58.39.
Fitch has a few encouraging words for the government’s measures to revive the economic. The agency lauded the government’s success in curbing fiscal deficit at 4.8 per cent which stood at 5.7 per cent in financial year 2011-12. The government “is addressing satisfactorily some of the structural obstacles to the investment and economic growth,” it says.
The rupee which ended at an all-time low yesterday after recording its steep fall to 58.98 in intra-day deals, showed signs of recovery in early morning trades on a series of assurances issued from Delhi. It firmed up gradually gaining almost one rupee at its top value trade with the dollar. The currency market volatility kept it lurking below and above 58-mark for the rest of the day. The domestic unit retrieved ground in line with the demand-supply positions. The rupee had depreciated from 53.8 in April to 58.98 on Tuesday afternoon.
A research note released by Bank of America-Merrill Lynch today said: “We feel that most of the depreciation may be behind us as gold imports are reduced and likely to fall given the steps taken by the government. Secondly, oil prices are stable and thirdly the government may be forced to raise the flow through NRI bonds in the near future.” In its opinion the rupee, which depreciated more than six per cent in one month, is likely to stay volatile in the near term “but the worst may be over.”
Meanwhile, the Planning Commission deputy chairman Mr Montek Singh Ahluwalia has objected to the description “ free-falling rupee” in media reports.