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:
  • Most Popular
  • Most Shared

Pending Reform

REUTERS SHOWCASE

Power Theft

Power Theft

India to invest $4 billion to tackle power theft  Full Article 

Debt Funds

Debt Funds

India monitors foreign flows into debt funds, may tighten rules  Full Article 

Bulgari Back in India

Bulgari Back in India

CEO: we shouldn’t have left India so we’re back  Full Article 

 Hindu "Modi-fication"

Hindu "Modi-fication"

Fears grow about Hindu "Modi-fication" of education  Full Article 

Weak Credit

Weak Credit

Hard to hit tax revenue target, credit weak - Jaitley  Full Article 

China Rate Cut

China Rate Cut

China surprises with interest rate cut to spur growth  Full Article 

Gold Imports

Gold Imports

RBI cautious on response to gold import surge  Full Article 

Economic Corridor

Economic Corridor

China commits $45.6 billion for economic corridor with Pakistan  Full Article 

Overseas Funds

Overseas Funds

RBI says overseas borrowed funds can be parked with banks in India  Full Article 

Reuters India Mobile

Reuters India Mobile

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