Rupee gains ahead of crucial parliament vote

MUMBAI Fri Nov 30, 2012 5:45pm IST

Rupee notes of different denominations are seen in this picture illustration taken in Mumbai April 30, 2012. REUTERS/Vivek Prakash/Files

Rupee notes of different denominations are seen in this picture illustration taken in Mumbai April 30, 2012.

Credit: Reuters/Vivek Prakash/Files

Related Topics

MUMBAI (Reuters) - The rupee rose on Friday for a third straight session, helped by capital inflows on optimism that the government will be able to win a vote in parliament and push through key reforms.

India's September quarter GDP was largely in-line, but the data showed the economy was on track for its worst year in a decade, raising hopes of some monetary easing from the central bank as early as December.

Dealers, however, stayed focused on a crucial parliament vote next week on allowing foreign entry in multi-brand retail. The vote is non-binding on the government, but any loss will seriously imperil its ability to undertake further reforms.

"The parliament vote will be the key. If the government wins, the rupee may rise to 53.70 to the dollar," said Naveen Raghuvanshi, associate vice-president at Development Credit Bank. "If it loses, we may see a sharp fall to 56."

The partially convertible rupee ended higher at 54.26/27 against its last close of 54.8350/8450 per dollar.

The rupee snapped four weeks of losses to gain 2.3 percent, its biggest weekly gain since early July. It also clocked a second month of gains, rising 0.9 percent.

Gross domestic product (GDP) grew 5.3 percent from a year earlier in the July-September period, provisional government data showed on Friday, below the 5.5 percent for the quarter ending in June.

Analysts said the GDP print may not force the central bank to rush into a rate cut in December, but many are looking at a repo cut in the January review. Most expect some liquidity-easing step like a cash reserve ratio cut in December.

"We suspect the release will further encourage the RBI to cut the repo rate at its January 29 meeting and we stick with the view that we will get a 50 bp move then," Credit Suisse said in a note.

In the offshore non-deliverable forwards market, the one-month contract was at 54.57, while the three-month was at 55.11.

In the currency futures market, the most-traded near-term dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed at around 54.60 with a total traded volume at around $5.3 billion.

(Reporting by Subhadip Sircar; Editing by Sunil Nair)

FILED UNDER:

Reuters Showcase

GDP Growth

GDP Growth

India revises up 2013/14 GDP growth to 6.9 percent.  Full Article 

Adani Restructuring

Adani Restructuring

Adani hives off power, ports businesses to boost growth.  Full Article 

Bank of Baroda

Bank of Baroda

Q3 net profit down 69 pct on higher provisions  Full Article 

Trading Fees

Trading Fees

BSE slashes fees in FX derivatives battle with NSE  Full Article 

SpiceJet Turnaround

SpiceJet Turnaround

SpiceJet board approves up to $243 mln share sale plan  Full Article 

Currency Market

Currency Market

RBI urges companies to hedge FX exposure  Full Article 

Banking Sector

Banking Sector

Banks say no room to cut lending rates, thwarting RBI easing  Full Article 

ICICI Results

ICICI Results

ICICI sets quarterly record profit as Q3 net rises 14 pct  Full Article 

Reuters Poll

Reuters Poll

RBI seen holding rates steady on Tuesday, minority of analysts expect cut  Full Article 

Reuters India Mobile

Reuters India Mobile

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