Rupee posts longest losing streak in nearly six months

MUMBAI Fri Nov 23, 2012 5:30pm IST

A Kashmiri shopkeeper staples together Indian currency notes to make a garland at a market in Srinagar September 3, 2012. REUTERS/Fayaz Kabli/Files

A Kashmiri shopkeeper staples together Indian currency notes to make a garland at a market in Srinagar September 3, 2012.

Credit: Reuters/Fayaz Kabli/Files

Related Topics

Priyanka Gandhi Vadra, daughter of Congress party chief Sonia Gandhi, adjusts her flower garlands as she campaigns for her mother during an election meeting at Rae Bareli in Uttar Pradesh April 22, 2014. REUTERS/Pawan Kumar

Election 2014

More than 814 million people — a number larger than the population of Europe — are eligible to vote in the world’s biggest democratic exercise.  Full Coverage 

MUMBAI (Reuters) - The rupee fell to over two-month lows on Friday, marking a fourth straight weekly loss for the currency and its longest losing streak in nearly six months, weighed down by persistent dollar buying by oil companies.

However, the Reserve Bank of India is believed to have sold dollars via state-run banks around 55.50 levels, putting brakes to a steeper fall in the currency.

Although the RBI has been speculated to have acted before, Friday's session marked the first clear signal of dollar sales since mid-October, dealers said.

The rupee has lost 3.6 percent of its value over these four weeks, with global markets weakening and amid growing worries about whether the government can contain the fiscal deficit and push through reforms in the winter session of parliament that kicked off this week.

"With month-end dollar demand still going through, the pressure is on the rupee to weaken. However, the market will be cautious of intervention from the central bank," said Vikas Babu Chittiprolu, a senior foreign exchange dealer with state-run Andhra Bank.

"There was a strong resistance at 55.40 for the USD/INR which, once broken, gave way to further gains. Now 56.10 is the next key level," he added.

The partially convertible rupee closed at 55.5350/5450 per dollar versus its previous close of 55.21/22. The unit dropped 0.6 percent on day, taking its fall to 0.7 percent on the week. The rupee fell to 55.53 during the day, its weakest since September 11.

Traders said sustained dollar buying by oil firms, the biggest buyers of dollars in the domestic currency market, hurt the rupee on Friday.

Despite the recent trend of weakness, the rupee remains far away from the bearishness seen in the nine weekly losses to June 1, when the unit had lost 8.4 percent, in its worst losing streak since the Lehman crisis.

The rupee had hit a record low of 57.32 on June 22.

Dealers said they expect the pair to hold in a 55 to 56.10 band next week, with exporters expected to step in to sell dollars around 56-56.10 levels.

Traders said they will continue to monitor developments at the winter session of parliament for indications of its likely impact on foreign fund flows. The sessions, however, have so far been marred with adjournments with no key decisions taken.

The market is keenly waiting to see if the government can pass key reforms such as foreign direct investment in pension and insurance, as well as the banking amendment bill. Failure to pass any of the key reforms could even eventually push the rupee down towards 57-levels traders said.

In the offshore non-deliverable forwards market, the one-month contract was at 55.81 while the three-month was at 56.40.

Westpac says 1-month USD/INR NDF could push above the 56 level in coming weeks as fundamentals still suggest a near-term turnaround is unlikely, even as valuations on a NEER basis are cheap compared with the rest of Asia.

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 closed at around 55.58 with a total traded volume of around $5.3 billion.

(Editing by Anupama Dwivedi)

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

Election 2014

Election 2014

Kashmiris wary as Modi challenges for power.  Full Article 

Facebook's Performance

Facebook's Performance

Facebook Q1 revenue grows 72 percent on rising mobile ads.  Full Article 

Earnings Season

Earnings Season

Bharti Infratel Q4 net profit jumps 64 percent.  Full Article 

Monsoon Forecast

Monsoon Forecast

South Asia monsoon seen below-average to average in 2014 - WMO.  Full Article 

Solar Dispute

Solar Dispute

Green groups urge U.S. to drop solar trade case against India.  Full Article 

Oil Imports

Oil Imports

India to make May-July oil payments to Iran - sources.  Full Article 

Rice Exports

Rice Exports

India may cede top rice exporter spot under Southeast Asian price onslaught.  Full Article 

Reuters India Mobile

Reuters India Mobile

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