Rupee snaps five-day fall as shares gain

MUMBAI Wed Feb 13, 2013 5:55pm IST

An employee counts rupee notes at a cash counter inside a bank in Kolkata June 18, 2012. REUTERS/Rupak De Chowdhuri/Files

An employee counts rupee notes at a cash counter inside a bank in Kolkata June 18, 2012.

Credit: Reuters/Rupak De Chowdhuri/Files

Related Topics

MUMBAI (Reuters) - The rupee strengthened on Wednesday, snapping a five-day losing streak, helped by gains in domestic share markets and the euro, and as the trade deficit did not widen as much as some analysts had feared.

Although India posted its second highest ever monthly trade deficit at $20 billion in January, that was well below market expectations of closer to $25 billion, as exports rose 0.8 percent from a year earlier.

Still, not all analysts were comforted by the data, given the prospect it would weigh on the current account deficit, an indicator the Reserve Bank of India (RBI) has previously said would be factored into its monetary policy.

Traders are bracing for wholesale price inflation data on Thursday. A Reuters poll expects the WPI to hit a three-year low of 7 percent, a number below the 7.5 percent that RBI Governor has previously called as "too high".

"Euro, positive stock market and a long weekend in most of Asia supported the rupee," said Paresh Nayar, head of fixed income and forex trading at First Rand Bank.

"Trade deficit figures are however very bad. Hopefully, February will be better but definitely India needs good inflows for filling this gap and so far foreign fund inflows have been helping."

Nayar said he expects the rupee to hold in a range of 52.85 to 54.25 in the near term.

The partially convertible rupee closed at 53.82/83 per dollar versus its previous close of 53.85/86.

The BSE Sensex rose for a second consecutive session on Wednesday, while the euro edged up against the dollar as traders cited demand from Middle East buyers.

Continued dollar demand from oil firms also helped support the rupee.

Traders said the upcoming foreign investor debt limit auction of over $11 billion on February 20 is also likely to boost the rupee with most of these funds likely to flow in before the sale date.

In the offshore non-deliverable forwards the one-month contract was at 54.09 while the three-month was at 54.69.

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 53.96 with a total traded volume of $4.22 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

Pharma

REUTERS SHOWCASE

Modi's U.S. Trip

Modi's U.S. Trip

PM Modi to get rock star reception in New York.  Full Article 

Northeast Floods

Northeast Floods

Landslides and floods kill 22 in northeast India.  Full Article 

Food Subsidy

Food Subsidy

Ram Vilas Paswan says no plans to raise food handouts.  Full Article 

New Plants

New Plants

Canadian auto parts maker Magna to open two new plants in Gujarat.  Full Article 

Importing Iron Ore

Importing Iron Ore

JSW Steel to import 10 mln T of iron ore due to local shortage.  Full Article 

Breaking Up

Breaking Up

Philips to split off lighting business, form separate company.  Full Article 

End of Monsoon

End of Monsoon

Monsoon starts withdrawing from northwest region.  Full Article 

Border Row

Border Row

Chinese and Indian troops in Himalayan standoff.  Full Article 

Reuters India Mobile

Reuters India Mobile

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