Indian rupee hits 3-wk high; more gains seen in near-term

Wed Jan 2, 2013 5:15pm IST

Related Topics

* Rupee rises to 54.35/36 per dlr vs 54.68/69 on Tues

* U.S. "fiscal cliff" deal boosts risk assets globally

* Mild dlr buying from oil firms pulls rupee off highs

By Swati Bhat

MUMBAI, Jan 2 (Reuters) - The Indian rupee rose to its strongest against the dollar in nearly three weeks on Wednesday as optimism over the U.S. "fiscal cliff" deal boosted risk assets globally, but demand for the greenback from oil firms pulled the unit off the day's high.

Analysts say the rupee could gain further given the strong start to the year in domestic stocks anticipating interest rate cuts from the central bank in January.

However, in the longer-term, concerns about the current account deficit, which hit a record high in the July-September quarter and the government's ability to keep its finances under control could determine the rupee's outlook.

"The short-term is bullish for the rupee but longer-term we need to watch out for the current account and fiscal deficit numbers which are presently acting against the rupee," said A. Ajith Kumar, a senior foreign exchange dealer with Federal Bank.

"But inflows may be there to an extent, so we may see gains until February or March, before any depreciation," he added.

The partially convertible rupee closed at 54.35/36 per dollar versus its previous close of 54.68/69.

The rupee rose to as high as 54.2650, its strongest since Dec. 14 during trade but retreated after oil firms, the biggest buyers of dollars in the domestic currency market, started purchasing the greenback.

On technical charts, the rupee is seeing good support in the 54.27-33 area, or the 76.4 percent retracement of 54.04-55.25, or the Dec. 6 to Dec. 21 rally.

India's NSE index rose to a two-year high, breaching the key psychological level of 6,000 at one point. Foreign funds pumped in 24.55 billion rupees into the equity market in 2012 and have been net buyers of shares in the first two days of 2013.

In the offshore non-deliverable forwards, the one-month contract was at 54.60 while the three-month was at 55.16.

In the currency futures market, the most-traded near-month dollar/rupee contract on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed at around 54.52 with a total traded volume of $5.53 billion. (Additional reporting by Reuters FX analyst Krishna Kumar in SYDNEY; Editing by Sunil Nair)

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

Apple Result

Apple Result

Apple's iPhone sales beat Street but iPad volumes slide.  Full Article 

Nadella's Paycheck

Nadella's Paycheck

New Microsoft CEO Nadella's pay tops $80 mln with big stock awards.  Full Article 

Deregulation Impact

Deregulation Impact

Private fuel retailers to dip toe, not dive back, into India  Full Article 

Airport Accident

Airport Accident

Total CEO de Margerie killed in Moscow plane accident - airport spokeswoman.  Full Article 

Gold Import

Gold Import

RBI will not change gold import rules - sources  Full Article 

Idea Results

Idea Results

Idea Cellular Q2 profit up 69 percent  Full Article 

An RBI First

An RBI First

RBI releases minutes of financial stability council's Aug meet  Full Article 

IBM Earnings

IBM Earnings

IBM ditches 2015 operating EPS target, shares slump 7 pct  Full Article 

Reuters India Mobile

Reuters India Mobile

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