Indian rupee gains ahead of crucial parliament vote; GDP data in-line

Fri Nov 30, 2012 5:35pm IST

Related Topics

* USD/INR closes at 54.26/27 versus 55.8350/8450 Thursday close

* INR gains after 4 weeks of losses, up 2.3 pct for week

* Parliament vote on retail FDI crucial to rupee's fortunes

By Subhadip Sircar

MUMBAI, Nov 30 (Reuters) - The Indian 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 Jan. 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

WTO Trade Deal

WTO Trade Deal

WTO clinches first global trade deal in its history  Full Article 

Kashmir Attack

Kashmir Attack

Ten dead in Kashmir's worst militant attack in more than a year  Read 

OPEC Meeting

OPEC Meeting

Saudis block OPEC output cut, oil price sinks further.  Full Article 

E-Commerce Boom

E-Commerce Boom

Online grocers come up trumps in India's e-commerce boom   Full Article 

GDP, RBI Preview

GDP, RBI Preview

GDP growth set to weaken, business wants reforms more than rate cut  Full Article | Related Story 

Jaitley to Rajan

Jaitley to Rajan

Jaitley likely to meet Rajan on Monday to urge rate cut  Full Article 

Banking Sector

Banking Sector

India moves to allow more businesses to offer basic financial services.  Full Article 

Jamini Roy

Jamini Roy

Photo Gallery – Bengali household name Jamini Roy’s paintings  Full Article 

Reuters India Mobile

Reuters India Mobile

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