Indian rupee falls as stocks, euro pummelled

MUMBAI, July 12 Thu Jul 12, 2012 5:26pm IST

Related Topics

MUMBAI, July 12 (Reuters) - The Indian 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 ($1.23 billion) 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 sharply cut its revenue guidance, raising worries about corporate earnings.

The BSE index 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. ($1 = 55.4175 Indian rupees)

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

Election 2014

REUTERS SHOWCASE

TCS Results

TCS Results

TCS net profit rises 51.5 percent, sees stronger sales growth.  Full Article | Quote 

Election 2014

Election 2014

Promises and more promises: India’s parties pitch their visions.  Full Article | Full Coverage 

India Markets

India Markets

Sensex slumps 207 points, at 2-1/2 week closing low.  Full Article 

Telecom Sector

Telecom Sector

RComm to raise mobile call tariff by up to 20 percent  Full Article 

Chinese Economy

Chinese Economy

China economic growth slows to 18-month low in first quarter  Full Article 

New Direction

New Direction

CEO Nadella pushes data culture at Microsoft.  Full Article 

Bitcoin ATM

Bitcoin ATM

China gets first bitcoin ATM, skirting bank crackdown.  Full Article 

Strong Sales Volume

Strong Sales Volume

Small is beautiful for Coca-Cola as volumes soar in China  Full Article 

Breakingviews

Breakingviews

Diageo throws money at Indian empire-building  Full Article 

Reuters India Mobile

Reuters India Mobile

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