Rupee gains most in two weeks; debt auction inflows help
MUMBAI (Reuters) - The rupee gained its most in two weeks on Wednesday, largely aided by inflows related to a debt auction, with volumes remaining low as most state-run banks were thinly staffed due to a strike.
Dealers said the gain was due to foreign funds buying rupees to participate in a debt-limit sale for foreigners, which they need to subscribe to for buying local debt.
India will auction about $12.3 billion of limits, including $10 billion of new government and corporate bond limits on Friday.
"Trading volumes were thin, which increases volatility. I did not see much participation by refiners. The next trigger will be the budget," said Naveen Raghuvanshi, associate vice-president at Development Credit Bank in Mumbai.
The rupee has seen a small bounce since it hit a one-month low in Monday's trading. Foreign investors have been jittery ahead of the federal budget on February 28, waiting to see whether Finance Minister P. Chidambaram puts fiscal discipline over election largesse.
Capital inflows have been supportive of the rupee, but the economy's weak fundamentals will continue to weigh.
Trade Minister Anand Sharma said India was likely to miss its $350 billion exports aim for the fiscal year.
Dealers said state-run banks had thin attendance due the strike, which hurt market volumes.
The partially convertible rupee closed at 54.075/085 per dollar versus its previous close of 54.185/195, a second session of gain. It rose 0.2 percent in trade, it biggest daily rise since February 5.
In the offshore non-deliverable forwards, the one-month contract was at 54.38, while the three-month was at 55.00.
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 54.18 with a total traded volume of $4.6 billion.
(Editing by Prateek Chatterjee)
- Tweet this
- Share this
- Digg this
Trending On Reuters
A brief meeting between India's Prime Minister Narendra Modi and his Pakistani counterpart appears to have salvaged a summit of South Asian leaders, with all eight countries clinching a last-minute deal to create a regional electricity grid. Full Article