Rupee retreats from over 3-1/2 month high

MUMBAI Wed Feb 6, 2013 5:25pm IST

A Kashmiri woman walks under a garland made of Indian currency notes on display at a market in Srinagar September 3, 2012. REUTERS/Fayaz Kabli

A Kashmiri woman walks under a garland made of Indian currency notes on display at a market in Srinagar September 3, 2012.

Credit: Reuters/Fayaz Kabli

Related Topics

Stocks

   

MUMBAI (Reuters) - The rupee retreated from an over three-and-a-half month high to end marginally lower on Wednesday as continued weakness in local stocks and oil refiner demand to meet crude payments outweighed dollar inflows ahead of the government's stake sale in a state-run utility.

Onshore dollar premiums rose to their highest in 14 years as foreign funds hedged their spot inflows in the forwards markets as the country gears up to raise around $2.25 billion in a share sale in NTPC Ltd (NTPC.NS) on Thursday.

More government stake sales are expected in February and March, although the key event remains the federal budget to be unveiled late this month. That will be a key test of the government's resolve to stick to its fiscal deficit target and avoid populist spending ahead of general elections in 2014.

"The FII inflow has been strong for the past few days and despite that the demand is pretty good around 53.00. Thus, once these inflows from FIIs mainly related to OFSs (offer for sale) start diminishing, INR may come under pressure," said Paresh Nayar, head of fixed income and forex trading at First Rand Bank in Mumbai.

The partially convertible rupee closed at 53.155/165 per dollar, versus its previous close of 53.135/145. It rose to 52.87 earlier in the session, its highest since October 17.

The one year onshore dollar premium surged to its highest in 14 years to 355 points versus its previous close of 348 points, a level last seen in late 1998.

That surge came ahead of NTPC's stake sale. The government also plans to sell shares in state trading company MMTC Ltd (MMTC.NS) and steelmaker Steel Authority of India Ltd (SAIL.NS) before the end of the fiscal year.

Still, the spot rupee remained under pressure as domestic shares ended flat, continuing its weak performance ever since the Reserve Bank of India last week disappointed investors with a cautious stance on future monetary policy.

The weakness in the euro against the dollar also weighed ahead of a European Central Bank meeting, while the rupee was also pressured by outflows related to gas utility.

In the offshore non-deliverable forwards, the one-month contract was at 53.43, while the three-month was at 53.99.

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 about 53.37 with a total traded volume of $4.4 billion. (Editing by Anand Basu)

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

FRESH RULES

A man speaks on his mobile phone in front of the Reserve Bank of India (RBI) seal at the RBI headquarters in Mumbai July 30, 2013. REUTERS/Vivek Prakash/Files

RBI says all companies must apply 2-step payments for credit cards

The Reserve Bank of India said that all transactions involving domestic credit cards must follow rules requiring additional verification, a stance that could impact companies such as Uber Technologies Inc that provide more simple app-based purchases.  Full Article 

REUTERS SHOWCASE

Record Highs

Record Highs

Nifty touches record high; software stocks gain.  Full Article 

New Adviser

New Adviser

Arvind Subramanian likely to be chief econ adviser.  Full Article 

Pricing Mechanism

Pricing Mechanism

Govt sets up a four-member panel to re-examine gas pricing.  Full Article 

Royalty Rates

Royalty Rates

India to hike iron ore royalty, miners may struggle to pass on extra cost.  Full Article 

Diesel Deregulation

Diesel Deregulation

Oil ministry to seek Cabinet nod on diesel deregulation - sources  Full Article 

Commodities

Commodities

Gold near two-month low; set for weekly drop on interest rate fears  Full Article 

Reuters Exclusive

Reuters Exclusive

Apple iPhone 6 screen snag leaves supply chain scrambling   Full Article 

Helping Regional Mills

Helping Regional Mills

Govt raises sugar import duty to 25 pct from 15 pct.  Full Article 

Curbing Risks

Curbing Risks

RBI to lower ceiling on bank loans to a single corporate group.  Full Article 

Reuters India Mobile

Reuters India Mobile

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