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

Stocks

   
Inside the Peshawar school

Inside the Peshawar school

The aftermath inside the Pakistan school where at least 132 students and nine staff members were killed by Taliban gunmen.  Pictures 

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)

FILED UNDER:

Reforms Push

REUTERS SHOWCASE

Reuters Exclusive

Reuters Exclusive

India looks to sway Americans with nuclear power insurance plan  Full Article 

To Boost Growth

To Boost Growth

Crank up public spending to revive growth - chief economic adviser.   Full Article 

Bold Steps

Bold Steps

SpiceJet rescue plan marks bold bet on Indian aviation recovery.   Full Article 

New Airline

New Airline

Tata, Singapore Air venture Vistara to take off on Jan 9.  Full Article 

Online Sales

Online Sales

Knock knock. Who's there? Amazon's best-selling holiday author.  Full Article 

26/11 Plotter

26/11 Plotter

Pakistan to challenge bail for Mumbai attack "mastermind".  Full Article 

Chinese Economy

Chinese Economy

China revises up size of 2013 economy, sees no effect on 2014 growth.  Full Article 

Reuters Poll

Reuters Poll

BSE Sensex to hit 32,980 by December 2015  Full Article 

Reuters India Mobile

Reuters India Mobile

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