Rupee weakens tracking shares

MUMBAI Thu Feb 14, 2013 5:33pm IST

A bank employee checks a 500 rupee note at a counter of Yes Bank's microfinance division in Mumbai October 25, 2008. REUTERS/Punit Paranjpe/Files

A bank employee checks a 500 rupee note at a counter of Yes Bank's microfinance division in Mumbai October 25, 2008.

Credit: Reuters/Punit Paranjpe/Files

Related Topics

MUMBAI (Reuters) - The rupee weakened on Thursday tracking losses in the domestic sharemarket but dollar demand from oil firms was largely met by supply from exporters, preventing a further slide.

Traders said weak domestic shares raised concerns of foreign funds pulling out their investments, which are critical for India at a time when it is battling a high current account deficit.

India's trade gap for January widened to $20 billion, the second-highest ever, but exports showed some improvement, raising hopes of a turnaround in the sector.

"The rupee weakened on the back of the stock market fall but demand from oil was mostly met by exporters. The next key trigger to watch out for now will be the budget later this month," said N.S. Venkatesh, treasurer at IDBI Bank.

"Despite exports having improved, the high trade deficit remains a worry and will keep the rupee under pressure. If the government announces a pro-growth budget with emphasis on reforms, the rupee may gain to 52. Until then I see the rupee holding in a 53.50 to 54.10 range."

The government is scheduled to unveil its last full budget before the elections in 2014, on February 28 .

The BSE Sensex fell on Thursday, snapping a two-day recovery, as State Bank of India dropped after bad loans weighed on its Q3 earnings, while Maruti ended lower after exclusion from MSCI indices.

The partially convertible rupee closed at 53.92/93 per dollar versus its previous close of 53.82/83.

Traders said the better-than-expected inflation data pulled the rupee off the day's lows briefly.

India's headline inflation rate moderated to its lowest level in more than three years in January, helped by a slower rise in fuel and manufactured goods prices, which could give policymakers more leeway to revive a slowing economy.

In the offshore non-deliverable forwards the one-month contract was at 54.19, while the three-month was at 54.78.

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 54.05 with total traded volume of $4.8 billion.

(Editing by Prateek Chatterjee)

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

Markets

REUTERS SHOWCASE

Segway in India

Segway in India

Segway’s India business pegs hope on tech-savvy Modi  Full Article 

Power Outage

Power Outage

Mumbai hit by power cuts  Full Article 

Commodities

Commodities

Gold imports, premiums to jump on festive demand - top refiner  Full Article 

Economic Worries

Economic Worries

Pakistan's promises to IMF in doubt as protests sap economy   Full Article 

Islamic Finance

Islamic Finance

Basel III deposit challenge looms over Islamic banks   Full Article 

Antitrust Probes

Antitrust Probes

U.S. business lobby says concerned China antitrust probes unfair.  Full Article 

Reuters India Mobile

Reuters India Mobile

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