Rupee falls; custodian banks sell dollars

MUMBAI Wed Jul 11, 2012 6:16pm IST

1 of 2. Rupee notes of different denominations are seen in this picture illustration taken in Mumbai April 30, 2012.

Credit: Reuters/Vivek Prakash/Files

Related Topics

Stocks

   

MUMBAI (Reuters) - The rupee fell on Wednesday, tracking weaker global risk assets such as the euro, though large dollar sales by custodian banks helped support the domestic currency.

Global risk sentiment continued to be dragged by euro zone concerns as a judgement from a German court on the euro zone's bailout funds is seen as unlikely to come quickly, potentially prolonging the uncertainty about the crisis.

Traders are also gearing up for India's industrial output data on Thursday and wholesale price inflation on Monday.

Concerns about India's fiscal and economic outlook had pummelled the rupee to a record low of 57.32 against the dollar late last month, though the currency has since recovered strongly.

"The worst for rupee is seen to be already behind. The strong headwinds from external sector stand diluted," said J. Moses Harding, head of asset liability at IndusInd Bank.

"There is genuine supply of dollars from exporters and FIIs on rupee weakness into 55.60-56.10. This level is seen as the worst case for rupee," he added referring to foreign institutional investors.

The partially convertible rupee closed at 55.62/63 as per the SBI closing rate, down from its Tuesday's close of 55.39/40.

Risk aversion pressured the rupee, with the BSE Sensex falling 0.7 percent.

However, dollar sales from custodian banks helped cap broader losses.

Three dealers added a Japanese bank sold between $270-$300 million, which they speculated could be tied to Kobe Steel's (5406.T) investment in an unit in eastern India as part of a joint venture with Steel Authority of India (SAIL.NS).

The one-month offshore non-deliverable forward contracts were quoted at 55.91 while the three-month were at 56.54.

In the currency futures market, the most traded near-month dollar-rupee contract on the National Stock Exchange, the United Stock Exchange and the MCX-SX all ended at around 55.65. The total volume was at $5.5 billion.

(Editing by Rafael Nam)

FILED UNDER:

Reuters Showcase

GDP Growth

GDP Growth

India revises up 2013/14 GDP growth to 6.9 percent.  Full Article 

Adani Restructuring

Adani Restructuring

Adani hives off power, ports businesses to boost growth.  Full Article 

Bank of Baroda

Bank of Baroda

Q3 net profit down 69 pct on higher provisions  Full Article 

Trading Fees

Trading Fees

BSE slashes fees in FX derivatives battle with NSE  Full Article 

SpiceJet Turnaround

SpiceJet Turnaround

SpiceJet board approves up to $243 mln share sale plan  Full Article 

Currency Market

Currency Market

RBI urges companies to hedge FX exposure  Full Article 

Banking Sector

Banking Sector

Banks say no room to cut lending rates, thwarting RBI easing  Full Article 

ICICI Results

ICICI Results

ICICI sets quarterly record profit as Q3 net rises 14 pct  Full Article 

Reuters Poll

Reuters Poll

RBI seen holding rates steady on Tuesday, minority of analysts expect cut  Full Article 

Reuters India Mobile

Reuters India Mobile

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