Indian rupee drops to lowest in a month on stocks, euro weakness

Fri Feb 15, 2013 5:28pm IST

Related Topics

* Rupee ends at 54.22/23 per dlr vs 53.92/93 on Thursday

* Macquarie says it remains cautious on INR ahead of the budget

* Rupee falls for second week, down 1.3 percent

By Subhadip Sircar

MUMBAI, Feb 15 (Reuters) - The Indian rupee fell to its lowest in nearly a month on Friday, hurt by weaker local shares and a slump in the euro following weak economic growth data.

The weakness in the stock markets ahead of the budget has raised concerns about future capital inflows, which has been crucial to the rupee's fortunes, making it one of Asia's top winners in 2013 so far.

That has been reflected in the rupee's performance which fell 1.3 percent this week, its biggest weekly loss in three months.

Currency dealers are also awaiting the outcome of the G20 meeting over the weekend.

"The rupee will remain weak in the run-up to the budget. The initial euphoria over the euro zone seems to be fading and local factors like the current account deficit will weigh," said Abhishek Goenka, chief executive at Indiaforex Advisors.

He expects the rupee to trade in a 53.50-55 band in the run-up to the budget.

The partially convertible rupee closed at 54.22/23 per dollar versus its previous close of 53.92/93, a second successive session of falls. It fell to 54.24 in the session, its lowest since Jan. 17.

Indian shares fell to their lowest this year as corporate earnings disappointed, while the euro fell after data showed the euro zone sinking more deeply into recession than expected.

Macquarie said it remains cautious on the rupee ahead of the budget session which begins on Feb. 21.

"If the budget contains more populist measures and less fiscal reform just ahead of the 2014 election, it could weigh on the INR," the investment bank said in a note on Friday.

The caution also comes amid doubts about how aggressively the Reserve Bank of India will cut interest rates given the high current account and fiscal deficits, even as data this week showed headline inflation easing to a three-year low.

In the offshore non-deliverable forwards the one-month contract was at 54.53, while the three-month was at 55.13.

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 54.335 with a total traded volume of $4.2 billion. (Editing by G.Ram Mohan)

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

Culling Plans

REUTERS SHOWCASE

Drug Approval

Drug Approval

Epirus, Ranbaxy win India approval for arthritis drug copy.  Full Article 

Fresh Demand

Fresh Demand

As mining curbs bite, India offers market to glut-hit iron ore.  Full Article 

Root Out 'Bad Apples'

Root Out 'Bad Apples'

RBI chief calls for cleaning up of banking system.  Full Article 

Android One

Android One

Google launches $105 Android One; eyes low-price smartphone boom.  Full Article 

Cognizant Deal

Cognizant Deal

Cognizant to buy TriZetto for $2.7 billion to boost healthcare business  Full Article 

India-Vietnam Ties

India-Vietnam Ties

India tightens Vietnam defence, oil ties ahead of China Xi's visit.  Full Article 

Antitrust Crusade

Antitrust Crusade

INSIGHT - "Mr. Confession" and his boss drive China's antitrust crusade .  Full Article 

Inflation Eases

Inflation Eases

Aug WPI inflation eases to near five-year low of 3.74 percent  Full Article 

Kashmir Floods

Kashmir Floods

Disease threatens as Kashmir flood waters turn fetid  Full Article 

Reuters India Mobile

Reuters India Mobile

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