Rupee weakens tracking shares
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)
- Tweet this
- Share this
- Digg this
- Exit polls see gains for BJP in state elections
- Pennsylvania newlyweds "just wanted to murder someone together:" police
- WTO overcomes last minute hitch to reach its first global trade deal
- Mega Millions jackpot climbs to $344 mln for next week
- UPDATE 2-Jay Z leads with 9 Grammy nominations, but newcomers vie for top honors
The World Trade Organization reached its first ever trade reform deal on Saturday to the roar of approval from nearly 160 ministers who had gathered on the Indonesian island of Bali to decide on the make-or-break agreement that could add $1 trillion to the global economy. Full Article