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:
  • Most Popular
  • Most Shared

Banking

REUTERS SHOWCASE

Tobacco Control

Tobacco Control

India moves toward ban on loose cigarettes to deter smoking   Full Article 

Pressure on RBI

Pressure on RBI

Exclusive - RBI under pressure to cut rates as growth slips  Full Article 

Asset Sale Dates

Asset Sale Dates

India yet to decide on dates for key asset sales - official   Full Article 

Women on Boards

Women on Boards

Germany to introduce legal quotas for women on company boards  Full Article 

OPEC Oil Talks

OPEC Oil Talks

Saudi, Russia pre-OPEC talks yield no oil output cut  Full Article 

India-U.S. Trade

India-U.S. Trade

India, U.S. hold first trade dialogue in four years  Full Article 

SAARC Summit

SAARC Summit

China looms over SAARC summit in the Himalayas  Full Article 

Microsoft in China

Microsoft in China

Microsoft to pay China $140 million for 'tax evasion'   Full Article 

Reuters India Mobile

Reuters India Mobile

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