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Rupee drops for 4th day, but off 2-week low

Rupee drops for 4th day, but off 2-week low
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First Published: Fri, Jan 22 2010. 06 25 PM IST
Updated: Fri, Jan 22 2010. 06 25 PM IST
Mumbai: The rupee fell for a fourth day on Friday, but pulled back from a two-week low struck early as exporters cashed in their dollars in the belief the drop was overdone.
The partially convertible rupee closed 0.2% weaker at 46.15/16 per dollar from previous day’s 46.04/05. The unit fell as low as 46.2750 in early deals, its lowest since 5 January. For the week, it fell about 0.8%.
“There was good interest on both sides. There was some dollar buying from oil firms but there was good exporter selling. There wasn’t much of commercial flows though,” said RK Gurumurthy, head of treasury, at ING Vysya Bank.
He said the rupee could gain towards 45.70 as charts indicate a dip in the dollar.
Traders now await the central bank’s policy review on 29 January. Economists are widely expecting the central bank to raise banks’ cash reserve requirement, but only one-third of those polled expect policy rate hikes at the policy.
“I expect a CRR hike and possibly staying pat on rates,” Gurumurthy said.
A recent poll conducted by Reuters shows the rupee is expected to rise to 43 by end-March 2011.
The dollar’s index against six major units fell 0.1%, helping avert a further fall in the rupee.
Shares fell for a fourth consecutive session on Friday and posted their biggest weekly drop in almost three months, weighed down by weak global markets and mixed quarterly earnings.
One-month offshore non-deliverable forward contracts were at 46.21/31, weaker than the onshore closing rate.
“We expect USD to generally remain strong but will stay volatile with data and news flows,” Indranil Pan and Shubhra Mittal, economists at Kotak Mahindra Bank, wrote in a note.
“Overall, USD-INR is expected to trade with an appreciation bias in Q4 2009/10. However, there could be some volatility based on news flows and the broad trading range of the currency is likely to be at 44.50-46.50,” they said.
In the currency futures market, the most traded near-month contracts on the National Stock Exchange and MCX-SX closed at 46.1800, with the total traded volume on the two exchanges at about $6.5 billion.
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First Published: Fri, Jan 22 2010. 06 25 PM IST
More Topics: Markets | India | Rupee | Dollar | Currency |