Rupee off lows on firms’ dollar sales; weak sahres weigh

Rupee off lows on firms’ dollar sales; weak sahres weigh
Comment E-mail Print Share
First Published: Thu, Dec 08 2011. 03 27 PM IST
Updated: Thu, Dec 08 2011. 03 27 PM IST
Mumbai: The rupee recovered from the day’s low in afternoon trades on Thursday aided by corporate dollar selling while weakness in local equities and absence of cues from the euro limited the pull-back.
At 2:42pm, the partially convertible rupee was at 51.76/77 per dollar, weaker than Wednesday’s close of 51.715/725 but up from 51.9250 touched in early trade.
The euro was steady on Thursday as investors waited to see if the European Central Bank would provide more support to indebted euro zone countries, a move that could give the common currency a slight boost.
Traders said recent statements from top officials from the Reserve Bank of India suggesting the central bank would take action in case of a sharp fall in the rupee was also supporting the rupee.
Subir Gokarn, a deputy governor at the Reserve Bank of India, on Wednesday said the bank does not want the current fall in the rupee to spiral out of control.
The rupee had touched a record low of 52.73 on 22 November and is the worst performer among Asian peers so far this year.
“It is not an impossible task for the rupee to return back to the 52 mark but I think the crucial support around 51.90 should hold for the day,” said a senior foreign exchange dealer with a private bank.
Subir Gokarn, a deputy governor at the RBI, on Wednesday said the bank does not want the current fall in the rupee to spiral out of control.
Last Saturday, Gokarn had said the RBI will use all available tools to stem a fall in the rupee if the currency’s downward spiral escalates.
The rupee had touched a record low of 52.73 on 22 November and is the worst performer among Asian peers so far this year.
“Market expectations of strong measures from EU summit to solve the debt crisis have changed following comments from Germany and so on. Hence, the mood is going to be very cautious through the day,” said Uday Bhatt, senior manager of dealing at UCO Bank.
The euro consolidated further on doubts about whether European leaders can agree on a plan to tackle the region’s debt crisis at a summit on Friday.
Optimism was tempered on Wednesday, when a senior German official told a pre-summit briefing he was “more pessimistic than last week about reaching an overall deal.”
The ECB will announce its rate decision at 06:15 am and it is widely expected by economists to cut interest rates.
The index of the dollar against six major currencies was at 78.469 points, compared with 78.602 points when the rupee market closed on Wednesday. The euro was trading at $1.3399 versus $1.3384 previously.
India’s main share index was down about 2% after ending positive on Wednesday.
The one-month offshore non-deliverable forward contracts were quoted at 52.23, below the onshore spot rate and indicating a bearish near-term outlook.
The one-month onshore forward dollar premium was at 28.25 points from 27.75 on Wednesday, the three-month was at 72 points from 69.50 points, and the one-year premium was at 209 points from 201.50.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were all at 52.0550. The total volume was at $1.67 billion.
Comment E-mail Print Share
First Published: Thu, Dec 08 2011. 03 27 PM IST
More Topics: Markets | Rupee | Currency | Asia | BSE |