Rupee gains on custodian banks; sentiment weak

MUMBAI Mon Nov 19, 2012 5:18pm 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

MUMBAI (Reuters) - The rupee rebounded on Monday from over two-month lows in the previous session on the back of dollar sales by custodian banks and a broad risk-on mood globally, but dollar demand from oil firms capped the gains.

Global shares and regional currencies gained on Monday on what investors perceived as encouraging signs of progress in talks to resolve the fiscal crunch in the United States.

However, caution is expected to prevail ahead of the start of the winter session of parliament, which will test the government's resolve to pass legislation at a time when worries about the fiscal deficit are rising.

Last week, India raised less than targeted in its auction of 2G mobile spectrum, exacerbating doubts about whether the government can meet its goal to contain its fiscal deficit at 5.3 percent of gross domestic product.

"After the 2G auction it seems difficult for the government to contain the fiscal deficit at 5.3 percent as estimated by the finance minister, so bias will be towards weakening of the rupee," said Uday Bhatt, a forex dealer with UCO Bank.

"The broad range for the near-term should be 54.50 to 56.00," he added.

The partially convertible rupee closed at 55.06/07 per dollar versus its previous close of 55.1650/1750. On Friday, the unit had dropped to a low of 55.2050, its weakest since September 13.

Traders saw good dollar inflows from custodian banks, helping the rupee gain to as much as 54.9375, although demand from oil refiners capped broader gains in the domestic currency.

Traders said the movement of the local share markets will also be key, given the importance of foreign fund flows to Indian markets. The benchmark BSE Sensex edged higher on Monday, rebounding from two-month lows.

In the offshore non-deliverable forwards market, the most-active one-month contract was at 55.32 while the three-month was at 55.90.

In the currency futures market, the most-traded near-month dollar/rupee contract on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed at around 55.11 with a total traded volume of $4.35 billion.

(Editing by Rafael Nam)

FILED UNDER:
Photo

After wave of QE, onus shifts to leaders to boost economy

DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.

OBAMA'S VISIT

Reuters Showcase

Coal Mining

Coal Mining

India to open coal to commercial mining firms soon, minister says  Full Article 

RBI Loan Rules

RBI Loan Rules

RBI relaxes overseas loan recast rules   Full Article 

E-commerce Firms

E-commerce Firms

Amazon, e-commerce rivals fuel commercial property boom in India  Full Article 

Growth Forecasts

Growth Forecasts

Indian economic growth forecasts pegged back, despite rate cuts: Reuters Poll.  Full Article 

Uber is Back

Uber is Back

Uber back in Delhi; govt says must await approval.  Full Article 

Markets at Record

Markets at Record

Sensex rises to record after ECB stimulus programme.  Full Article 

Pharma Sector

Pharma Sector

Ipca Labs hit by FDA ban on plant for standard violations.  Full Article | Related Story 

Forex Reserves

Forex Reserves

India FX reserves at record high as RBI fortifies defences  Full Article 

QE for Euro Zone

QE for Euro Zone

ECB launches 1 trillion euro rescue plan to revive euro economy.  Full Article 

Reuters India Mobile

Reuters India Mobile

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