BackRupee snaps 2-day fall on industrial data, weak dollar
Rupee snaps 2-day fall on industrial data, weak dollar
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Mumbai: The rupee snapped a two-day losing streak on Friday buoyed by a better-than-expected industrial output growth, late losses in the dollar versus major currencies and an increase in China’s reserve requirements.
China’s central bank on Friday increased the amount of money that lenders must keep on reserve for the third time in one month, a move to mop up excess cash in the economy and rein in inflation.
“There was a knee-jerk reaction to the China hike, but overall the sentiment turned bullish. There were rumours of a weekend hike in interest rates in China, which now seems unlikely, so some risk taking is expected to be seen on Monday; thus rupee’s rise," the chief foreign exchange dealer at a foreign bank said.
The partially convertible rupee closed at 45.05/06 per dollar, off a low of 45.35 and 0.35% stronger than 45.21/22 at close on Thursday.
“The rupee perfectly held at 45.35 for a move back to 45 levels. 45.35-45.50 levels are good for exporters to cover their 1-3 month receivables and now importers should not take chances in this volatile market and hedge 1-2 month payables at 44.95-45.10 levels," said J. Moses Harding, head of global markets at IndusInd Bank.
“For a change, the rupee tracked the stock market today and deplugged a bit from the euro/dollar. For the near-term, it should be stuck in a 44.85-45.35 range," he added.
Traders said better-than-expected industrial output growth supported shares and renewed hopes for sustained foreign fund investments into Asia’s third-largest economy.
India’s annual industrial output in October grew at its fastest clip in three months, powered by demand for consumer durable goods such as cars, though the data is unlikely to prompt the central bank to raise interest rates next week.
Foreign funds have have dumped a net $728.74 million worth of shares this week.
However, the total foreign fund inflows into local stocks so far in 2010 still stand at $28.7 billion, on top of the $17.5 billion purchased last year.
Indian shares rose 1.4% on Friday, snapping a three-session losing streak, on better-than-expected industrial output growth and bargain buys.
The index of the dollar against six major currencies was down 0.2% at 79.929 points when the rupee market closed.
The euro held steady against the dollar on Friday while the Australian dollar staged a relief rally after China increased the reserve requirement for banks but kept interest rates on hold.
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