Rupee snaps three-day gains as euro falters

MUMBAI Fri Nov 2, 2012 5:38pm IST

A man uses an electronic machine to check a currency note at a money exchange shop in Siliguri May 18, 2009. REUTERS/Rupak De Chowdhuri/Files

A man uses an electronic machine to check a currency note at a money exchange shop in Siliguri May 18, 2009.

Credit: Reuters/Rupak De Chowdhuri/Files

Related Topics

Stocks

   

MUMBAI (Reuters) - The rupee snapped a three-day winning streak after hitting a one-week high early in the session on Friday as sharp losses in the euro prompted banks to cover their short dollar positions heading into the weekend.

The euro fell to a three-week low against the greenback, pushing the dollar index to a seven-week high, with traders citing option-related selling of the euro by macro investors.

"The market is getting thinner and moves have been usually tracking the flows. In the morning there were moves tracking flows, but later we started tracking the euro," said Paresh Nayar, head of fixed income and forex at First Rand Bank.

Nayar added, "54.20 seems like a good resistance for the USD/INR and if that holds, 53.20 can be seen".

The partially convertible rupee closed at 53.8050/8150 per dollar versus its previous close of 53.6950/7150. It had hit 53.61 earlier in the session, its strongest since October 25.

The rupee lost 0.2 percent on the day, taking its fall to 0.5 percent on the week.

Traders said a further fall in the rupee was averted by gains in the local share market. Foreign fund inflows into the domestic share market are a key determinant of the rupee's fortunes.

Shares ended up 1 percent, helped by select buying in recent underperformers such as ITC Ltd (ITC.NS) and Larsen and Toubro (LART.NS) as the global risk environment improved on the back of better-than-expected U.S. economic data.

Foreign funds have bought more than $18 billion of shares so far in 2012.

"Markets are uncertain about the winter session of Parliament, US election results and Greece. I see a higher probability of USD/INR moving towards 53.00/52.50 compared to 55.00," said Samir Lodha, managing director at QuantArt Market Solutions.

"I see the government being committed to ensuring capital inflows and that should help the rupee."

In the non-deliverable forwards market, the one-month contract was at 54.14 while the three-month was at 54.70.

In the currency futures segment, the most traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed at around 54.0850, with a total traded volume of $3.56 billion.

(Editing by Subhranshu Sahu)

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

REUTERS SHOWCASE

Coal Block Allocation

Coal Block Allocation

Government urges Supreme Court to not cancel some 'illegal' coal mines  Full Article 

Modi in Japan

Modi in Japan

Japan and India agree to boost strategic ties at summit  Full Article 

Basel III Norms

Basel III Norms

RBI amends Basel III guidelines for banks  Full Article 

HSBC PMI

HSBC PMI

Factory activity expands at slower clip in August.  Full Article 

Current Account

Current Account

Balance of payments surplus for third straight quarter  Full Article 

India Infrastructure

India Infrastructure

RBI rule handicaps India's infrastructure hopes  Full Article 

Book Talk

Book Talk

Reema Abbasi and a glimpse of Pakistan’s Hindu past  Full Article 

China Economy

China Economy

Retreat in China's PMIs heightens calls for policy easing.  Full Article 

Managing Share Sales

Managing Share Sales

Govt seeks bids from banks to manage PFC, REC share sales   Full Article 

Reuters India Mobile

Reuters India Mobile

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