Rupee falls as stocks, euro pummelled

MUMBAI Thu Jul 12, 2012 5:32pm IST

A grocery shop owner counts rupees notes in Ahmedabad May 23, 2012. REUTERS/Amit Dave/Files

A grocery shop owner counts rupees notes in Ahmedabad May 23, 2012.

Credit: Reuters/Amit Dave/Files

Related Topics

Stocks

   

MUMBAI (Reuters) - The rupee fell for a second consecutive session on Thursday as local stocks were pummelled, while risk currencies such as the euro were hit by intensifying worries about the global economy.

The rupee fell even after data showed May industrial output rose 2.4 percent in May, much higher than the 1.8 percent growth expected by a Reuters survey of analysts. The good news was offset after the April numbers were revised downwards.

Although global risk factors are likely to impact the rupee in the near-term, few traders expect a repeat of June, when the currency slumped to a record low of 57.32 to the dollar.

Instead, hopes for policy reforms are expected to support the rupee. Government officials have strongly hinted at a potential hike in diesel prices, which would help alleviate concerns over India's fiscal outlook.

Traders have also cited signs of meaningful foreign flows. Preliminary regulatory data shows overseas investors bought a net 67.9 billion rupees in equities and 16.6 billion rupees in debt so far this month.

"There are no new factors to trigger any further depreciation in the exchange rate," said N. S. Paramasivam, chief executive at NSP Forex.

He expects the rupee to trade in a 55-56 range in the near term.

The partially convertible rupee closed at 55.93/94 as per the SBI closing rate, down from its Wednesday's close of 55.62/63.

Asian currencies were under pressure after a surprise rate cut from South Korea and a 50-basis point reduction in Brazil underscored the widespread nature of the global economic slowdown.

The euro fell to a two-year low against the dollar, hit as well by uncertainty about Europe's progress in addressing the debt crisis.

The rupee was also pressured by the slump in local stocks after software service exporter Infosys (INFY.NS) sharply cut its revenue guidance, raising worries about corporate earnings.

The BSE Sensex declined 1.5 percent, marking its biggest fall since June 1.

Despite, the worsening global risk environment, NDFs are not signalling a renewed fall to record lows for the rupee.

The one-month offshore non-deliverable forward contracts were quoted at 56.22 while the three-month were at 56.88.

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 56.03. The total volume was at $4.6 billion.

FILED UNDER:

Reuters Showcase

Land Ordinance

Land Ordinance

Modi says willing to make changes in land decree  Full Article 

Sahara Salaries

Sahara Salaries

Some staff say Sahara has not paid salaries for months   Full Article 

DLF Fined

DLF Fined

DLF says reviewing $8.4 million SEBI penalty  Full Article 

Gold Demand

Gold Demand

India gold demand muted, eyes cut in import duty  Full Article 

Rail Budget

Rail Budget

Breakingviews - India goes back to future with $137 bln rail push  Full Article | Full Coverage 

Clean Energy

Clean Energy

India says clean energy a $160 billion opportunity over five years  Full Article 

Fall From Grace

Fall From Grace

How Sands fell from grace at Standard Chartered   Full Article | Related Story 

Buffett Annual Letter

Buffett Annual Letter

Buffett, a cheerleader for America, takes his checkbook abroad  Full Article 

Reuters India Mobile

Reuters India Mobile

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