Rupee rebounds after hitting latest record low

MUMBAI Fri May 18, 2012 5:46pm IST

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

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

Credit: Reuters/Vivek Prakash/Files

Related Topics

Priyanka Gandhi Vadra, daughter of Congress party chief Sonia Gandhi, adjusts her flower garlands as she campaigns for her mother during an election meeting at Rae Bareli in Uttar Pradesh April 22, 2014. REUTERS/Pawan Kumar

Election 2014

More than 814 million people — a number larger than the population of Europe — are eligible to vote in the world’s biggest democratic exercise.  Full Coverage 

MUMBAI (Reuters) - The rupee recovered after earlier dropping to its third consecutive daily record low, tracking a recovery in domestic stocks and after a RBI deputy governor said the Reserve Bank of India would continue to defend the currency.

RBI's Subir Gokarn said the central bank will continue with its intervention as well as administrative measures to support the local currency, which has fallen over 10 percent since its February peak.

The rupee also recovered despite the battering of other global risk assets on Friday as it approached the psychologically key level of 55.00, and as traders speculated the RBI was still liable to implement measures after already targeting deposits and exporters' foreign currency accounts.

"I think the rupee is oversold. There cannot be an unidirectional move. I expect the RBI to come in with some measures which will pull back the rupee to 54-53.50 levels to the dollar," said Subramanian Sharma, director at Greenback Forex.

The USD/INR settled at 54.42/44 per dollar on Friday compared to Thursday's close of 54.48/49, according to State Bank of India closing data.

The rupee had started the day on a much weaker footing, having hit a new record low of 54.91 earlier in the session, though gains in the Sensex after strong earnings from State Bank of India helped the local unit as well.

No actual intervention from the central bank was spotted by dealers on Friday, though traders speculated the RBI could open a window for oil companies to buy dollars directly from the RBI.

Traders estimate demand from state-run oil firms to be about $400-$500 million on a daily basis, forming a substantial chunk of daily market demand.

Still, more measures from the RBI are expected after the rupee has hit record lows in the previous three sessions, surpassing the previous all-time lows hit in December.

Despite the central bank's best efforts, traders say the rupee may see more falls if global risk aversion continues, given India also faces steep challenges at home, primarily in the form of a widening current account deficit.

The rupee has fallen 3.1 percent so far in May, despite foreigners being net buyers of $357 million in local stocks and bonds during the period.

The one-month offshore non-deliverable forward contracts were at 54.78.

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 54.54 on a total volume of $4.8 billion.

(Reporting by Subhadip Sircar)

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

RAINFALL THIS YEAR

REUTERS SHOWCASE

Election 2014

Election 2014

Thousands mob Modi as election race starts in Varanasi.  Full Article 

Monsoon Forecast

Monsoon Forecast

Met office rules out surplus monsoon in 2014.  Full Article 

Facebook's Performance

Facebook's Performance

Facebook Q1 revenue grows 72 percent on rising mobile ads.  Full Article 

Earnings Season

Earnings Season

Bharti Infratel Q4 net profit jumps 64 percent.  Full Article 

Solar Dispute

Solar Dispute

Green groups urge U.S. to drop solar trade case against India.  Full Article 

Oil Imports

Oil Imports

India to make May-July oil payments to Iran - sources.  Full Article 

Rice Exports

Rice Exports

India may cede top rice exporter spot under Southeast Asian price onslaught.  Full Article 

Reuters India Mobile

Reuters India Mobile

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