Rupee pares losses; ends at 59.63 per dollar

Steps taken by regulators to curb the fall and positive cues from global markets will help the currency, say dealers
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First Published: Fri, Jul 12 2013. 09 27 AM IST
Comments by US Federal Reserve chairman Ben Bernanke, too, helped the rupee’s recovery, dealers said. Photo: Ramesh Pathania/Mint
Comments by US Federal Reserve chairman Ben Bernanke, too, helped the rupee’s recovery, dealers said. Photo: Ramesh Pathania/Mint
Updated: Fri, Jul 12 2013. 05 50 PM IST
Mumbai: The Indian rupee recovered from its early losses to close at 59.63 against the dollar on Friday, marginally up from its previous close, after touching a low of 60.17 during intra-day trading.
The unit, which touched a life-time low of 61.21 against the dollar on Monday, has recovered 2.65% since then and dealers expect the currency to hold its current levels in the approaching weeks, backed by the steps taken by regulators to curb the currency’s fall and positive cues from global markets.
After the rupee tumbled to its life-time low, both the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi) had stepped in with measures to support the currency.
The RBI on Monday prohibited banks from carrying out any proprietary trading in the currency futures/exchange-traded currency options markets. Any such trades could only be on the behalf of clients, the regulator said. Sebi on Tuesday raised margin requirements, or the money to be provided upfront on trades, and curtailed open positions—which limits the extent of trading—on currency derivatives starting 11 July.
Comments by US Federal Reserve chairman Ben Bernanke, too, helped the rupee’s recovery, dealers said. On Wednesday, Bernanke said a highly accommodative monetary policy would be needed for the foreseeable future, sparking hope that any tapering of the asset-purchase programme wasn’t necessarily imminent, Reuters reported.
According to forex dealers at two state-run banks, positive factors have supported the currency. “One should expect the unit to trade above 59-levels in the approaching sessions,” one of them said. Both did not want to be named because they are not authorized to talk to the press.
During the day, the rupee touched a high of 59.61. Since January this year, the rupee has weakened 7.77% and has lost the most among Asian currencies during the period.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 83.06, up 0.38% from the previous close.
In a note issued on Wednesday, rating agency Crisil Ltd, the Indian subsidiary of global rating agency Standard and Poor’s, said the rupee’s depreciation will lift input costs across many sectors. According to the agency, exporters are unlikely to benefit significantly due to the rupee depreciation, as clients may seek to renegotiate contracts.
“We expect the rupee to strengthen from its current levels, but the 2013-14 average will still be 5-8% weaker than the 2012-13 average,” Crisil said.
On Friday, India’s benchmark Sensex ended at 19,958.47, up 1.44% from the previous close, while yield on India’s 10-year benchmark bond ended at 7.53% against its previous close of 7.463%.
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First Published: Fri, Jul 12 2013. 09 27 AM IST
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