Rupee gains on first day in 2013; more upside seen

MUMBAI Tue Jan 1, 2013 5:21pm IST

A man deposits his money in a bank in the northern Indian city of Amritsar April 19, 2010. REUTERS/Yasir Iqbal/Files

A man deposits his money in a bank in the northern Indian city of Amritsar April 19, 2010.

Credit: Reuters/Yasir Iqbal/Files

Related Topics

MUMBAI (Reuters) - The rupee started 2013 on a positive note tracking gains in local shares after U.S. lawmakers agreed on a deal which would help avert the "fiscal cliff" but weak domestic data limited a sharper rise.

The Senate moved the U.S. economy back from the edge of a "fiscal cliff" on Tuesday, voting to avoid imminent tax hikes and spending cuts in a bipartisan deal that could still face stiff challenges in the House of Representatives.

India's current account deficit widened to a record high of 5.4 percent of GDP in the September quarter as export growth slowed more sharply than imports, data released just around market close on Monday showed.

Traders said going by the current data it was likely that the data for the Oct-Dec quarter would be even worse and it would be a key factor that forex participants would watch out for in the coming months.

Traders broadly expect the rupee to gain in 2013 on the back of rate cut hopes, recently announced reforms and the likelihood of sustained dollar inflows on the back of loose monetary policy in most countries globally.

"There are enough negatives like increasing imports and current account deficit, political instability, high fiscal deficit, high inflation, uncertainty in Europe," said Samir Lodha, managing director at QuantArt Market Solutions.

"However, at this stage we feel moderately bullish about the rupee - assuming capital flows will weigh on current account deficit for a while. I see the rupee at around 53 levels by end-March".

The partially convertible rupee closed at 54.68/69 per dollar versus its previous close of 54.99/55.00.

Traders said gains in the domestic sharemarket also boosted sentiment for the rupee.

The BSE Sensex ended up 0.8 percent after the U.S. deal.

In the offshore non-deliverable forwards, the one-month contract was at 54.96 while the three-month was at 55.50.

In currency futures, 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 55.04 with total traded volume on the three exchanges at $2.99 billion.

(Editing by Sunil Nair)

FILED UNDER:

Surprise Rate Cut

Reuters Showcase

Insurance Bill

Insurance Bill

Opposition support bolsters prospects for insurance reforms  Full Article 

SBI Share Sale

SBI Share Sale

SBI's up to $2.4 billion share sale likely by end April - sources   Full Article 

Eicher Share Sale

Eicher Share Sale

Truck maker Volvo sells shares in Eicher Motors  Full Article 

Beef Ban

Beef Ban

After beef ban, Hindu groups force abattoirs to close   Full Article 

Monsoon Season

Monsoon Season

Exclusive - India expects better monsoon rains this year  Full Article 

Services Growth

Services Growth

Services growth at eight-month high in Feb - HSBC PMI  Full Article 

'India's Daughter'

'India's Daughter'

Documentary on 2012 Delhi gang rape banned in India  Full Article 

Capex Slashed

Capex Slashed

Cairn India slashes 2015-16 capex on falling crude   Full Article 

Strong Start

Strong Start

Airwaves auction off to strong start, bids near $10 billion.  Full Article 

Reuters India Mobile

Reuters India Mobile

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