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

  • Most Popular
  • Most Shared

Shares Hit Record

Sensex, Nifty rise to second consecutive record high

Sensex surges 500 points on BOJ easing, L&T gains

The BSE Sensex and Nifty surged to record highs for a second consecutive session on Friday after Bank of Japan's surprise expansion of its massive stimulus programme raised hopes for additional foreign inflows, boosting blue-chips such as Larsen & Toubro.  Full Article 

REUTERS SHOWCASE

Wilful Negligence?

Wilful Negligence?

SEBI piles pressure on Sahara to sell overseas hotels  Full Article 

Indian Economy

Indian Economy

India's fiscal deficit in H1 almost 83 pct of full-year target.  Full Article 

M&M Earnings

M&M Earnings

M&M Q2 net profit down 4 percent, hit by poor monsoon.  Full Article 

Ban on E-Cigs?

Ban on E-Cigs?

Govt considers ban on e-cigarettes, sale of single smokes.  Full Article 

Commodities

Commodities

Silver futures in India hit four-year low on global cues.  Full Article 

BOJ Policy

BOJ Policy

BOJ shocks markets with surprise easing as inflation slows.  Full Article 

Shadow Banking

Shadow Banking

China's shadow banking sector growing rapidly, third largest in world - FSB.  Full Article 

Reuters India Mobile

Reuters India Mobile

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