Rupee lower on weak shares, dollar demand

MUMBAI Tue Jan 22, 2013 5:38pm IST

Rupee notes of different denominations are seen in this picture illustration taken in Mumbai April 30, 2012. REUTERS/Vivek Prakash/Files

Rupee notes of different denominations are seen in this picture illustration taken in Mumbai April 30, 2012.

Credit: Reuters/Vivek Prakash/Files

Related Topics

Stocks

   

MUMBAI (Reuters) - The rupee came off near three-month highs to end lower on Tuesday after gains from the government's move to raise the import tax on gold were erased by dollar demand from state-run banks and weak equities.

The government, late on Monday, raised the import duty on gold by 2 percentage points to 6 percent in a bid to curb purchases and rein in the country's bloated current account deficit.

Gold-related dollar demand by importers constitutes an important source of greenback demand in the foreign exchange market, which dealers estimate at around $150-$170 million on a daily basis.

Nomura said the move may help in part to lower the current account deficit to 4.3 percent of GDP in FY14 from an estimated 4.9 percent in the current fiscal year.

The current account and fiscal deficits have been a drag on the rupee and been a major worry for foreign investors.

"We need portfolio capital flows in line with easing of the trade deficit for the rupee to appreciate," said Rajesh Cheruvu, chief investment officer, India-private banking at RBS.

He expects the rupee to trade in a 53-55 range and only see a meaningful rise in the December quarter, aided by a growth recovery.

The government recently allowed refiners to raise diesel prices in small measures, adding to the recent steps taken to assuage foreign investor sentiment and rating agencies.

Finance Minister P. Chidambaram met investors in Hong Kong on Tuesday as part of a four-city tour to boost capital inflows.

The partially convertible rupee closed at 53.81/82 per dollar, weaker than its 53.765/775 close on Monday. It rose to 53.3750 earlier in the session, its highest level since October 24.

Indian shares snapped a three-day winning streak on Tuesday after Hindustan Unilever (HLL.NS) earnings disappointed on volume growth, ending 0.6 percent lower.

In the offshore non-deliverable forwards, the one-month contract was at 54.04, while the three-month was at 54.60.

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 53.7525 with a total traded volume of $7.7 billion.

(Editing by Anupama Dwivedi)

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

Economic Pulse

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