India rupee falls as traders cautious before Fed meeting; NMDC shares fully sold

Wed Dec 12, 2012 5:52pm IST

Related Topics

* Rupee ends at 54.32/33 per dollar vs 54.26/27 on Tuesday

* NMDC's $1.1 billion share sale fully covered

* October factory output jumps 8.2 pct; rate cut hopes dim

By Subhadip Sircar

MUMBAI, Dec 12 (Reuters) - The Indian rupee fell slightly on Wednesday as caution prevailed ahead of the U.S. Federal Reserve's decision on whether to expand monetary stimulus, but a robust growth in factory output and inflows related to share sales supported the local currency.

The Federal Reserve is expected to announce a new round of bond purchases after its meeting later in the day, setting up the prospect of a round of dollar weakness that could propel emerging market currencies.

Investors are also looking ahead at November inflation date due on Friday, which will be the key ahead of a Reserve Bank of India's policy review on Dec. 18.

"We are likely to see some more government stake sales and M&A deals, which will support the rupee," said Satyajit Kanjilal, chief executive at Forexserve, an advisory firm for corporates.

"I expect the rupee to gain towards 53.50-53.60 levels towards the last week of December."

The partially convertible rupee closed at 54.32/33 per dollar, weaker than its close of 54.26/27 on Tuesday.

A sharp jump in the October industrial output data, led to some gains in the rupee, with some economists saying the slowdown in the economic growth may have bottomed out, although the volatile nature of the report makes it harder to draw strong conclusions.

The rupee was also supported by an up to $1.1 billion share auction in state-run miner NMDC Ltd, which was fully covered, and by inflows related to Bharti Infratel's initial public offering process.

Some outflows were cited by dealers on account of a stake sale by BT Group in Tech Mahindra worth about $186 million.

In the offshore non-deliverable forwards, the one-month contract was at 54.63, while the three-month was at 55.16.

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 54.47, with total traded volume of $4.1 billion. (Editing by Anand Basu)

FILED UNDER:

Economic Pulse

Reuters Showcase

Reaction to Budget

Reaction to Budget

India budget unlikely to impact credit rating - agencies  Full Article 

PMI Data

PMI Data

Factory activity growth slows to five-month low in Feb  Full Article 

Documents Leaked

Documents Leaked

Indian Oil suspends official for leaking information - sources  Full Article 

Ola Buys Rival

Ola Buys Rival

Ola buys rival TaxiForSure for $200 million  Full Article 

Coal Auction

Coal Auction

India examines coal mine bids amid reports of discrepancies  Full Article 

Battling Apple

Battling Apple

Samsung unveils sleek new Galaxy phones  Full Article 

China Economy

China Economy

China Feb HSBC PMI at seven-month high but more rate cuts seen on the cards  Full Article 

Global Economy

Global Economy

Stimulus swells as China eases, India spends   Full Article 

Reuters India Mobile

Reuters India Mobile

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