"Handshake across the Himalayas"
India and China will study new ways to ease tensions along their ill-defined border, Chinese Premier Li Keqiang said on Monday in his first foreign trip since taking office, which comes just weeks after a military stand-off between the Asian giants in the Himalayas. Full Article | Slideshow
Confused while buying stocks? Get buy, sell or hold recommendations from VantageTrade. Full Coverage
India rupee hits 3-week low; falls for fifth day as RBI disappoints
* Rupee ends at 54.85/86 per dlr vs 54.84/86 on Monday
* Strong dlr demand from oil, defence firms hurts rupee
* Exporters refrain from selling dlrs after RBI stays on hold
By Swati Bhat
MUMBAI, Dec 18 (Reuters) - The Indian rupee dropped for a fifth straight day, weakening to its lowest level in three weeks on Tuesday as heavy dollar demand from oil and defence firms offset inflows into the domestic stock markets.
Exporters also refrained from selling dollars at current levels on expectations of further weakness after the central bank disappointed markets by keeping key rates on hold at its policy review. Though the outcome was widely expected, investors had been hoping for a surprise cut in rates.
The central bank maintained a status quo ignoring government pressure to reduce borrowing costs, but said it was shifting its focus towards boosting a flagging economy, raising the odds of a rate cut as early as January.
"Stocks, euro and all other things are positive but the INR is weakening because of strong demand. Once that demand is over, we may see some positive moves in the rupee," said Uday Bhatt, a foreign exchange dealer with UCO Bank.
"There are flows but demand surpasses that. There was good demand from oil and defence heard today. I expect the pair to move in a 54.75 to 55.10 range tomorrow," he added.
The partially convertible rupee closed at 54.85/86 per dollar, after having dropped as low as 55.0550, its weakest since Nov. 29. The unit had closed at 54.84/86 on Monday.
Oil firms, the largest buyers of dollars in the domestic currency market, have been buying the greenback aggressively in recent sessions, hurting the rupee.
The dollar index fell to a two-month low on Tuesday, with the U.S. currency dipping against the euro after signs of progress in negotiations over the so-called U.S. fiscal cliff helped lift market sentiment.
Indian shares rose led by lenders such as SBI, as hopes parliament will pass the banking amendment bill outweighed disappointment after the RBI policy decision.
In the non-deliverable forwards market, the one-month contract was at 55.17 while the three-month was at 55.66.
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 54.96 with a total traded volume of 5.14 billion. (Editing by G.Ram Mohan)
- Tweet this
- Share this
- Digg this