Rupee snaps five-day fall as shares gain
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)
- Tweet this
- Share this
- Digg this
Trending On Reuters
Indian economic growth forecasts pegged back, despite rate cuts: Reuters Poll. Full Article