Rupee falls on euro weakness; fate of future reforms key

MUMBAI Fri Dec 7, 2012 5:40pm IST

An employee uses an electronic machine to check an Indian currency note inside a bank in the northern Indian city of Allahabad December 16, 2011. REUTERS/Jitendra Prakash/Files

An employee uses an electronic machine to check an Indian currency note inside a bank in the northern Indian city of Allahabad December 16, 2011.

Credit: Reuters/Jitendra Prakash/Files

Related Topics

Border Security Force (BSF) soldiers ride their camels as they rehearse for the "Beating the Retreat" ceremony in New Delhi January 27, 2015. REUTERS/Ahmad Masood

"Beating The Retreat" Rehearsals

Rehearsals are on for "Beating the Retreat" ceremony which symbolises retreat after a day on the battlefield, and marks the official end of the Republic Day celebrations.  Slideshow 

MUMBAI (Reuters) - The rupee fell on Friday, snapping three sessions of gains, dragged by the euro's weakness, but dealers said that the local currency may gain if the government can push through more reforms in parliament next week.

The government expectedly won the vote on foreign investment in retail in the Rajya Sabha on Friday. Bolstered by the win, the government said it will bring more financial sector reform bills next week in parliament.

Dealers expect the rupee to gain more if the government pushes through reform proposals like allowing foreign direct investment in the pension sector and raising the limit for insurance.

However, the twin deficits, on the fiscal and current account, may continue to be a drag.

"The positives from reforms have been factored in the rupee rally into 54.10, but fundamental concerns from the widening trade gap and high dependence on short-term capital flows will weigh against it," said Moses Harding, head of asset-liability management at IndusInd Bank.

"There will be bunched-up demand into month/year end. FIIs (foreign institutional investors) also may be in exit mode ahead of the financial year-end, gaining from both underlying equity assets and the exchange rate."

The partially convertible rupee closed at 54.47/48 per dollar, 0.6 percent weaker than its close of 54.1350/1450 on Thursday. For the week, the rupee fell 0.4 percent, a fifth week of fall in six.

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.

The euro fell to a nine-day low against the dollar on Friday after the Bundesbank slashed its growth outlook for Germany, with the single currency at risk of more losses on prospects of a euro zone rate cut.

In the offshore non-deliverable forwards, the one-month contract was at 54.78, while the three-month was at 55.30.

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 54.71 with a total traded volume of $5.4 billion.

(Editing by Prateek Chatterjee)

FILED UNDER:
Photo

After wave of QE, onus shifts to leaders to boost economy

DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.

Reuters Showcase

Vodafone Ruling

Vodafone Ruling

Government will not appeal Vodafone tax ruling   Full Article 

Indian Railways

Indian Railways

Private refiners compete with state firm to sell diesel to railways   Full Article 

Ranbaxy Results

Ranbaxy Results

Dec-quarter net loss widens on forex loss  Full Article 

Market Eye

Market Eye

Sensex, Nifty retreat from record highs on profit-taking.  Full Article 

Tech Talk

Tech Talk

Apple takes high road in China smartphone standoff with Xiaomi.  Full Article 

Business Strategy

Business Strategy

Uber scraps commissions for its New Delhi taxis.  Full Article 

Job Cuts

Job Cuts

Sony to cut 1,000 jobs in smartphone business - sources.  Full Article 

Reuters India Mobile

Reuters India Mobile

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