Rupee ends two days of gains on share weakness, growth worries

MUMBAI Thu Dec 27, 2012 5:46pm IST

An employee sorts rupee notes at a cash counter inside a bank in the northeastern Indian city of Agartala February 18, 2010. REUTERS/Jayanta Dey/Files

An employee sorts rupee notes at a cash counter inside a bank in the northeastern Indian city of Agartala February 18, 2010.

Credit: Reuters/Jayanta Dey/Files

Related Topics

MUMBAI (Reuters) - The rupee fell after two sessions of gains on Thursday, tracking lower stocks and as oil refiners bought dollars, with the local currency headed to end the year with losses.

Concerns about slowing growth continue to dog the rupee's fortunes with policy makers raising doubts about whether the once red-hot economy can even muster an 8 percent average growth.

Prime Minister Manmohan Singh dubbed a five-year plan for average growth of 8 percent "ambitious" and warned that business-as-usual policies won't deliver higher growth.

The rupee's outlook over the next few days could be determined by global currency movements as efforts to solve the so-called U.S. "fiscal cliff" are expected to continue, although the unit could see some support from dollar sales by exporters.

"We might see some (dollar) sales in the last two days as some bunched up EEFC funds are likely to hit the market," said Hari Chandramgathan, chief forex dealer at South Indian Bank, referring to dollars that exporters park in designated accounts.

The partially convertible rupee closed at 54.93/94 per dollar versus its Wednesday close of 54.8350/8450. It traded in a 54.72-54.9850 range in the session.

Local shares gave up early gains to end lower on the back of volatility tied to the expiry of monthly derivatives at the end of the session. .BO

End-of-month dollar purchases by oil refiners also weighed on the rupee.

The rupee remains the third worst performer among Asian currencies in 2012 tracked by Reuters after the Japanese yen and Indonesian rupiah.

The weakness also reflects worries about India's current account and fiscal deficits, which helped send the rupee to a record low in June, and comes in spite of capital inflows that have topped $24 billion in 2012, with over $4 billion in December alone.

In the offshore non-deliverable forward market, the one-month contract was at 55.21 while the three-month was at 55.73.

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 55.25 with a total traded volume of $3.2 billion.

(Editing by Subhranshu Sahu)

FILED UNDER:

Politics

REUTERS SHOWCASE

Fund Raising

Fund Raising

Flipkart raises $700 million in fresh funding.   Full Article 

Reforms Push

Reforms Push

Modi may order insurance, coal reforms if vote delayed - officials.  Full Article 

Reuters Exclusive

Reuters Exclusive

India looks to sway Americans with nuclear power insurance plan  Full Article 

To Boost Growth

To Boost Growth

Crank up public spending to revive growth - chief economic adviser.   Full Article 

Bold Steps

Bold Steps

SpiceJet rescue plan marks bold bet on Indian aviation recovery.   Full Article 

New Airline

New Airline

Tata, Singapore Air venture Vistara to take off on Jan 9.  Full Article 

Online Sales

Online Sales

Knock knock. Who's there? Amazon's best-selling holiday author.  Full Article 

Hacking Attack

Hacking Attack

N.Korea says did not hack Sony, wants joint probe with U.S.  Full Article 

Reuters Poll

Reuters Poll

BSE Sensex to hit 32,980 by December 2015  Full Article 

Reuters India Mobile

Reuters India Mobile

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