Rupee hits one-month high; further gains likely

MUMBAI Thu Dec 6, 2012 5:21pm IST

A shopkeeper poses for a picture as he counts Indian currency notes at his shop in Jammu May 16, 2012. REUTERS/Mukesh Gupta/Files

A shopkeeper poses for a picture as he counts Indian currency notes at his shop in Jammu May 16, 2012.

Credit: Reuters/Mukesh Gupta/Files

Related Topics

MUMBAI (Reuters) - The rupee rose for a third session on Thursday, marking its sixth rise in seven days, as the decision of the Bahujan Samaj Party to support the government on the retail FDI issue in the upper house is likely to help the government win the vote.

On Wednesday, India's fragile ruling coalition won a vote in the Lok Sabha on allowing foreign supermarkets to operate in the country, in a key test of support for Prime Minister Manmohan Singh and his flagship economic reform.

"The win in the lower house was already mostly discounted by the market but the upper house win helped the rupee break the 54.25 level. The overall target now is 53.20," said Vikas Babu Chittiprolu, a senior foreign exchange dealer with Andhra Bank.

Traders said the rupee moved in a wide 54.04 to 54.5775 band with dollar demand from oil and gold importers pushing it lower and prompting exporters to step in and sell the greenback, thus, limiting a sharper fall.

The partially convertible rupee closed at 54.1350/1450 per dollar, 0.75 percent stronger than its close of 54.54/55 on Wednesday. The unit rose as high as 54.04, its strongest since November 7.

Sentiment toward the rupee improved over the past two weeks and net short positions on the unit fell by over two-thirds, a Reuters forex positioning poll on Thursday showed.

Traders said a recovery in the domestic share market also helped sentiment for the rupee in the second half. The BSE Sensex gained 0.5 percent, its third consecutive rise.

Rupee could rise to 52 per dollar by the end of 2013 and is Credit Agricole's top pick among the emerging markets, it said in a note earlier in the day.

The government's win in the Lok Sabha would continue to help the rupee despite questions on whether the reform would be approved by the Rajya Sabha and concerns about its implementation.

"The government's victory is a good sign of its ability to push through other reforms," Credit Agricole said.

In the offshore non-deliverable forwards, the one-month contract was at 54.42 while the three-month was at 54.94.

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 54.2850 with a total traded volume of $6.30 billion.

(Editing by Anand Basu)

FILED UNDER:
  • Most Popular
  • Most Shared

Insight

REUTERS SHOWCASE

Border Talks

Border Talks

India names Ajit Doval as special envoy for China border talks.  Full Article 

WTO Deal

WTO Deal

U.S. seeks to step up India trade talks  Full Article 

Phone Masts

Phone Masts

American Tower to buy Bharti Nigeria phone masts for $1.1 billion  Full Article 

Infrastructure Plan

Infrastructure Plan

India targets private cash to build railways to its ports.  Full Article 

Shadow Banking

Shadow Banking

Reserve Bank planning more measures for NBFCs.  Full Article 

Auto Sector

Auto Sector

Hyundai Motor, Kia Motors lift 2014 global sales target on China, emerging markets  Full Article 

Oil Prices

Oil Prices

Some fund managers see oil falling to $60 without OPEC cut.  Full Article 

Project Shelved

Project Shelved

Jindal Steel shelves $10 bln project after coal setback.  Full Article 

Market Eye

Market Eye

Sensex, Nifty rise to record after China, ECB stimulus boosts risk appetite.  Full Article 

Reuters India Mobile

Reuters India Mobile

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