Rupee drops for third day in a row; oil demand hurts

MUMBAI Thu Nov 22, 2012 5:17pm IST

1 of 2. A shopkeeper poses for a picture as he counts currency notes at his shop in Jammu May 16, 2012.

Credit: Reuters/Mukesh Gupta/Files

Related Topics



MUMBAI (Reuters) - The rupee weakened for a third straight session on Thursday as persistent dollar buying by oil refiners and absence of major dollar inflows due to a holiday in the United States hurt the local unit.

Traders are also growing wary of India's fiscal stance after a government source said fiscal deficit could reach 5.5 to 5.6 percent of its GDP in the financial year to end March, which could require additional market borrowing of 350-400 billion rupees.

"Personally, I continue to run moderately short USD positions even at this stage. I do not agree to the consensus of 56-57 levels on the pair and think the rupee can appreciate hereon with a second round of capital inflows," said Samir Lodha, managing director at QuantArt Market Solutions.

The partially convertible rupee closed at 55.21/22 per dollar versus its previous close of 55.11/12.

Traders estimated about $200 million worth of dollar demand, which they attributed to Cipla (CIPL.NS), after the drug maker said on Wednesday it would offer $215 million for a majority stake in South Africa's Cipla Medpro CMPJ.J.

The absence of major flows due to the Thanksgiving holiday in the United States also weighted on the rupee.

Dealers expect the pair to move in a 54.50 to 55.50 range in the immediate future, pending developments at the winter session of parliament which started on Thursday.

"The winter session will be key. The rally seen in the rupee post the reforms announcement was short-lived, but even a small negative is hurting the rupee," a senior dealer with a state-run bank said. The dealer predicted the rupee to remain in a 54.80 to 56 range, and head above 56 by year-end.

In the offshore non-deliverable forwards market, one-month contract was at 55.51, while the three-month was at 56.09.

In the currency futures market, 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 55.25 with a total traded volume of $4.3 billion. (Editing by Prateek Chatterjee)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

IT Sector


Telecom Sector

Telecom Sector

RIL telecoms unit in tower lease pact with ATC  Full Article 

Tracking Asia

Tracking Asia

Asian stocks subdued on Ukraine caution  Full Article 



Gold falls to 2-1/2 week low in thin trade  Full Article 

A Tough Sell

A Tough Sell

Insurance against a China financial crisis  Full Article 

Reuters India Mobile

Reuters India Mobile

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