Rupee off lows on euro rebound, dollar inflows

Rupee off lows on euro rebound, dollar inflows

Mumbai: The rupee recovered from its intraday low in afternoon trade on Monday aided by a pullback in the euro and some corporate dollar inflows, traders said.

At 2:19pm, the partially convertible rupee was 49.23/24 per dollar, weaker than Thursday’s close of 48.97/98, but stronger from 49.57 touched in early trade.

The euro was at $1.3365, after touching a low of $1.3314 earlier. It had been at $1.3614 at the end of rupee trade last Thursday. The domestic currency market was closed on Friday for half-yearly closing of banks’ accounts.

The index of the dollar against six major currencies was at 78.886 points from 77.721 previously.

The data from HSBC Markit suggest that September was the worst month for India’s factories since March 2009 -- when it shrank, just as world stock markets carved their lowest point since the financial crisis began.

At 11:16am, the partially convertible rupee was 49.41/42 per dollar, 0.9% weaker than its previous close of 48.97/98. It had touched 49.57 in early trade.

Traders said the rupee could slide to 49.90, matching a 28-month low hit on 23 September, if risk aversion continues to dominate world markets. The 30-share BSE index fell nearly 2%.

“If the euro continues to slip the way it has in the past few sessions, then rupee may well hit 49.90 again," said a senior foreign exchange dealer at a private-sector bank.

The central bank is suspected to have sold dollars when the rupee had touched that level in September, and traders said intervention hopes would keep the unit from slipping to 50.

The Reserve Bank of India (RBI) releases intervention data with a lag and the September action will be known in November.

On 28 September, H.R. Khan, one of the deputy governors of the RBI, had told Reuters in Istanbul that the central bank monitors domestic foreign exchange market movement closely and intervenes to “smooth excess volatility whenever there is need".

The euro sank to an eight-month low against the dollar on Monday and is poised to fall further after the Greek government said the debt-ridden country will miss a deficit target set just months ago in a massive bailout package.

The euro was at $1.3331, sharply lower from $1.3614 at the end of rupee trade last week, while the index of the dollar against six major currencies was at 79.056 points from 77.721 previously.

The one-month onshore forward premium was at 25.25 points from 21.75, the three-month was at 63.75 points from 62 and the one-year was at 125.75 points from 125.

The one-month offshore non-deliverable forward contracts were quoted at 49.68, weaker than the spot rate and indicating a bearish medium-term outlook.

In the currency futures market , the most traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and on the United Stock Exchange were all at 49.62. The total traded volume on the three exchanges was $1.7 billion.