Rupee falters on foreign outflow fears

MUMBAI Tue May 8, 2012 6:27pm IST

Rupee notes of different denominations are seen in this picture illustration taken in Mumbai April 30, 2012. REUTERS/Vivek Prakash

Rupee notes of different denominations are seen in this picture illustration taken in Mumbai April 30, 2012.

Credit: Reuters/Vivek Prakash

Related Topics

MUMBAI (Reuters) - The rupee fell on Tuesday on worries foreign investors would not be swayed by the government's move to address their concerns over taxation, sparking a tumble in domestic stocks and fears of continued outflows.

The falls in the afternoon session prompted the Reserve Bank of India to step in when the rupee weakened to 53.30 against the dollar, according to four dealers, continuing a series of interventions since last week.

The rupee erased the gains on Monday when the government announced it would postpone controversial tax rules for foreign investors and would shift the onus of proving evasion on tax authorities.

Despite the moves, foreign investors sold a net of 10.3 billion rupees in domestic stocks on Monday and Tuesday, according to provisional data from the National Stock Exchange.

"The initial euphoria about the GAAR is done. The market is now looking at actual flows," said Uday Bhatt, senior manager of dealing with state-run UCO Bank.

The rupee fell 0.4 percent against the dollar to 53.12/13, weakening from its Monday close of 52.9050/9150.

The rupee is fast approaching a record low of around 54.30 to the dollar, weighed down by worries about India's fiscal and economic challenges, and increasingly, that foreign investors will exit from the country.

Reserve Bank of India deputy governor Subir Gokarn said on Tuesday a widening current account deficit and a negative balance of payments are still worries for the central bank.

"We acknowledge that India is currently running a large current account deficit that requires capital flows to fund. Therefore, the global risk environment is critical to its performance," Nomura said in a note on Tuesday.

The one-month offshore non-deliverable forward contracts were at 53.45.

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 ended around 53.38 on a total volume of $5.23 billion.

(Editing by Rafael Nam)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

India-Nepal Ties

REUTERS SHOWCASE

Facebook Results

Facebook Results

Facebook beats Wall Street targets, stock hits record high  Full Article 

GM Recall

GM Recall

GM recalls 717,950 vehicles in U.S., not for ignition switches  Full Article 

Factory Sector

Factory Sector

China July HSBC flash PMI at 18-month high of 52.0   Full Article 

Breakingviews

Breakingviews

Apple winds up earnings hope for new gadgets  Full Article 

BRICS Bank

BRICS Bank

World Bank chief welcomes new BRICS development bank.  Full Article 

Streamlining Operations

Jet Streamlines

Jet Airways chairman says looking to restructure debts, talking to bankers  Full Article 

Political Economy

Political Economy

Analysis - Watch what markets don't do as world politics turns nasty   Full Article 

Honda's India Thrust

Honda's India Thrust

Honda's India unit to account for 25 pct of Asia Pacific sales by March 2017 - exec   Full Article 

 Boosting Output

Boosting Output

NMDC plans to boost iron ore output by two-thirds  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage