SEBI overstating dollar figures for FII investment?

Mumbai: A technical negligence seems to have led to the dollar figures for foreign investments in Indian market being overstated by about 25 per cent, as SEBI has been using a static rupee conversion rate for past one-and-a-half years.

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SEBI provides information about FII investments in equity and debt markets on a daily basis that is widely consulted by market participants to understand the FII trend.

The SEBI website provides daily investment figures for the previous trading day in rupee as well as dollar terms at "month exchange rate."

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However, this exchange rate has remained unchanged at Rs 40.34 to a dollar since October 10, 2007, although there have been a wide variance in the rupee-dollar exchange rate since then. Last few months, dollar is hovering near Rs 50-level.

The static exchange rate, which could be due to technical negligence, has led to dissemination of false FII investment figures in the US currency for about one-and-a-half years.

Officials at SEBI could not be immediately contacted for their comments and an emailed media query remained unanswered.

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On this, Kejriwal Research and Investment Services' Arun Kejriwal said, "As far as rupee value is concerned there is no confusion as value of rupee remains unchanged. But when we look at dollar value it is overstated by around 25 per cent currently and creates a wrong impression in investors' minds."

The rational for fixing the currency price should be closer to market price and may be fixed on a periodic basis like the Reserve Bank of India does for purposes of foreign trade," Kejriwal added.

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The latest daily figure, for trading session on April 16, gives an exchange rate of Rs 40.34 for a dollar and the same exchange rate has been mentioned for each day's trade since October 9, 2007.

The exchange rate used by SEBI stood at 40.8212 for the month of October 2007 and also for the previous month, except for the first few days when it was 40.4139.

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The exchange rate is understood to be changing regularly prior to October 9, 2007, but has remained constant since then in SEBI's calculations.

This is despite the rupee depreciating sharply from the levels seen in October 2007 to more than 50-level a few months ago, since then it has remained near that level.

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