21383

Rupee falls for a third consecutive session

The partially convertible currency closes at 52.72/73 per dollar against its previous close of 52.64/65
Comment E-mail Print Share
First Published: Tue, Oct 09 2012. 09 15 AM IST
The rupee had strengthened for five straight weeks until Friday, gaining a total 7.1% on the back of a slew of fiscal and economic reforms and stimulus measures from global central banks. Photo: Pradeep Gaur/Mint
The rupee had strengthened for five straight weeks until Friday, gaining a total 7.1% on the back of a slew of fiscal and economic reforms and stimulus measures from global central banks. Photo: Pradeep Gaur/Mint
Updated: Tue, Oct 09 2012. 06 01 PM IST
Mumbai: The Indian rupee touched its lowest level in a week on Tuesday after falling for a third consecutive session as dollar demand from largely oil importers and broad dollar short-covering offset inflows tied to the gains in domestic shares.
The euro fell on uncertainty about when Spain will apply for a bailout, but losses were capped after European Central Bank (ECB) president Mario Draghi reiterated its financial support for troubled euro zone states was unlimited within certain conditions.
Some traders speculated the Reserve Bank of India bought dollars in spot markets to prevent a one-way movement in the pair, but state-run banks who usually act on behalf of the central bank were not sure whether that had been the case.
“Importers have continued to buy as well as some ECB-related hedging has been seen at lower levels,” said Rajeev Mahrotri, head of forex and debt trading at IndusInd Bank Ltd.
“53.50 is quite likely to be hit soon I think, but for now don’t think the rupee will go higher than that. After that we should see range-bound rupee for a while,” he added.
The partially convertible rupee closed at 52.72/73 per dollar versus its previous close of 52.64/65, after hitting a session low at 52.83, its lowest since 1 October.
The pair moved in a wide band of 52.2250 to 52.83 during the session.
The rupee had strengthened for five straight weeks until Friday, gaining a total 7.1% on the back of a slew of fiscal and economic reforms and stimulus measures from global central banks.
Gains in domestic shares helped limit the losses on Tuesday. Traders monitor equity markets, given the importance of foreign flows. Foreign institutional investors have bought a net $16.5 billion in Indian equities so far this year.
Investors are looking ahead at the industrial output data on Friday, which is expected to have risen a modest 1.1%, indicating continued weak economic conditions.
The International Monetary Fund cut India’s 2012 growth forecast to 4.9% from 6.1%, and advised the central bank to keep monetary policy on hold until price pressures subside.
Heavy dollar selling in the offshore non-deliverable forwards market helped the spread between the spot and one-month non-deliverable forward shrink to 20 basis points against 34 basis points on Monday, traders said. One basis point is one-hundredth of a percentage point.
The one-month non-deliverable offshore contract was trading at 52.88 while the three-month was at 53.35.
In the onshore forwards, the one-month was quoted at a premium of 36 points, while the three-month was at 90.75 points.
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 all closed at around 52.7950 with a total traded volume of about $6 billion. Reuters
Comment E-mail Print Share
First Published: Tue, Oct 09 2012. 09 15 AM IST
More Topics: Markets | Rupee | Currency | Asia | BSE |
blog comments powered by Disqus
  • Wed, Jul 30 2014. 05 04 PM
  • Wed, Jul 23 2014. 06 06 PM
ALSO READ close

FII G-sec limits: Achieves many objectives; reversal risk remains

Subscribe |  Contact Us  |  mint Code  |  Privacy policy  |  Terms of Use  |  Advertising  |  Mint Apps  |  About HT Media  |  Jobs
Contact Us
Copyright © 2014 HT Media All Rights Reserved