India rupee hits 3-wk low; U.S. 'fiscal cliff' development eyed

Fri Dec 21, 2012 5:18pm IST

Related Topics

* Rupee ends at 55.06/07 per dlr vs 54.8450/8550 on Thurs

* Losses in local shares, dlr demand from importers hurt

* INR seen in 54.10 to 55.50 broad range next week-traders

By Swati Bhat

MUMBAI, Dec 21 (Reuters) - The Indian rupee hit a three-week low on Friday, extending its fall for a third straight week, as uncertainty over the U.S. "fiscal cliff" resolution dented demand for risk assets including domestic equities.

Traders said month- and year-end dollar demand from oil and gold importers also added to the downward pressure on the local currency. Oil firms bought the greenback aggressively this week while gold importers purchased the U.S. unit to take advantage of relatively lower global gold prices.

"INR has been choppy and I expect it to remain so in the last week as well. The U.S. fiscal agreement will be important for the market," said Paresh Nayar, head of fixed income and forex trading at First Rand Bank.

"54.10 is showing good support while 55.45 is the first technical resistance. I expect the pair to hold in that broad range next week," Nayar added.

The partially convertible rupee closed at 55.06/07 per dollar versus its previous close of 54.8450/8550. The unit fell to a low of 55.2550, its weakest since Nov. 29.

On the week, the rupee shed 1 percent of its value, marking its third consecutive weekly fall.

Traders said dollar sales by exporters around the 55.20 to 55.25 levels helped the rupee recover some of its losses from the day's lows but the weakness in shares hurt.

Shares ended lower, marking a second week of declines, as lenders were hit by profit-taking, while Bharti Airtel fell after federal police filed charges as part of a probe into alleged corruption in allocation of mobile airwaves.

Sentiment for the rupee has also been dented by a status quo at the central bank's policy review earlier this week. The RBI kept interest rates on hold on Tuesday, 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.

Global stock markets weakened on Friday and both the euro and gold slipped, as a new setback in talks to avert a U.S. fiscal crisis and evidence of Europe's ongoing economic difficulties stoked investor nerves.

In the offshore non-deliverable forward market, the one-month contract was at 55.43 while the three-month was at 55.95.

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 closed at around 55.1975 with a total traded volume of $5.38 billion. (Editing by Subhranshu Sahu)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Press Event

Press Event

Modi takes tea, but no questions, in first press event as PM.  Full Article 

School Shooting

School Shooting

Two killed, four wounded in Washington state school shooting.  Full Article 

Sundar Pichai Elevated

Sundar Pichai Elevated

Google's Pichai to oversee major products and services.  Full Article 

Need For Reforms

Need For Reforms

Euro zone risks "relapse into recession" without structural reforms - Draghi.  Full Article 

Diwali Sales

Diwali Sales

Gold sales jump about 20 pct for Diwali - trade body  Full Article 

World Bank Rival

World Bank Rival

Three major nations absent as China launches W.Bank rival in Asia  Full Article 

Wal-Mart India

Wal-Mart India

Murali Lanka appointed as Wal-Mart India operations chief  Full Article 

Health Of Lenders

Health Of Lenders

25 European banks set to fail health checks - sources.  Full Article 

India Insight

India Insight

Kalki Koechlin on her role as a disabled girl in “Margarita, With a Straw”  Full Article 

Reuters India Mobile

Reuters India Mobile

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