India rupee hits 3-1/2 month highs; oil demand limits gains
* Rupee ends at 53.30/31 per dollar vs 53.76/77 on Tuesday
* Exporters sell dollars on expectations of more supply in near-term
* USD/INR may fall to 52.50 levels in the next one month-trader
By Swati Bhat
MUMBAI, Jan 30 (Reuters) - The Indian rupee strengthened to its highest level in nearly three-and-a-half months on Wednesday, helped by dollar inflows for upcoming share sales and positive sentiment on the back of a strong euro.
The Indian government expects to raise more than $465 million by selling a 10 percent stake in Oil India Ltd on Friday, while an about $2 billion stake sale in power producer NTPC is likely to take place on Feb. 7.
The gains in the rupee came despite caution about whether the Reserve Bank of India will continue to cut interest rates after lowering the repo rate by 25 basis points on Tuesday. These worries have hit domestic bond prices, and capped share gains.
"The flows for the stake sales via qualified institutional placements and offer for sales which are in talks are helping the rupee. Exporters, too, are selling on expectations of more dollar supply," said Vikas Babu Chittiprolu, a senior forex trader at state-run Andhra Bank.
"I expect the rupee to gain towards 52.50 in the next one-month," he added.
The partially convertible rupee closed at 53.30/31 per dollar, 0.9 percent stronger than its close of 53.76/77 on Tuesday. The unit rose as high as 53.28, its strongest since Oct. 18.
Traders said the rupee benefited from a gain in the euro to 14-month highs against the dollar ahead of the Federal Reserve's first policy meeting of the year. The Fed is widely expected to stick to its super-easy policy until U.S. unemployment falls sharply.
Traders said larger gains in the rupee were capped by demand for the greenback from oil firms, the biggest buyers of dollars in the domestic currency market, whose demand peaks at the end of each month when they are required to make payments.
In the offshore non-deliverable forwards, the one-month contract was at 53.53 while the three-month was at 54.10.
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 53.52 with a total traded volume of $5.02 billion. (Editing by Anand Basu)
- Tweet this
- Share this
- Digg this
- China building South China Sea island big enough for airstrip - report
- Obama signs order expanding U.S. Afghanistan role - NY Times
- Obama to be chief guest at Republic Day celebrations
- Pakistani family sentenced to death over "honour killing" outside court
- Long "to do" list for Modi as clock ticks on reform
Prime Minister Narendra Modi has a long list of pro-growth measures to implement over the next four months, but time may have already run out to breathe enough life into the economy to meet the tough 2014/15 fiscal deficit target without cuts. Article