Rupee sees worst day in 1-1/2 months; shares fall

MUMBAI Thu Feb 21, 2013 7:20pm IST

1 of 2. An employee uses an electronic machine to check a rupee note inside a bank in Allahabad December 16, 2011.

Credit: Reuters/Jitendra Prakash/Files

Related Topics

MUMBAI (Reuters) - The rupee fell its most in one-and-a-half months on Thursday as global risk aversion pushed local stocks sharply lower, with the currency awaiting cues from the budget next week.

Global risk assets were pummelled as world share markets fell and the dollar and safe-haven assets rose, a day after minutes of the Federal Reserve's last policy meeting cast doubts over how much longer the U.S. central bank would stick to its stimulus plan.

The sell-off was reflected in Indian markets as local shares fell their most in nearly seven months, raising concerns about whether there will be continued inflows into equities that have largely buoyed the rupee so far.

Volumes continued to be thin as there was little participation from state-run banks in the second day of a nationwide strike.

"The fall in the rupee on Thursday was a reflection of the stock market. However, I expect some bunched-up dollar inflows on Friday due to the ongoing strike," said Sudarshan Bhat, chief foreign exchange dealer at Corporation Bank.

He expects the rupee to trade in a 54.25-54.75 range in the run-up to the federal budget.

The partially convertible rupee closed at 54.47/48 per dollar versus its previous close of 54.075/085. It fell 0.7 percent, its biggest daily fall since January 4.

Dealers are looking forward to the federal budget to see whether Finance Minister P. Chidambaram will present a budget that will put fiscal discipline ahead of populist spending.

A budget favourable to rating agencies and foreign investors is likely to trigger a rally in equities and the rupee.

In the offshore non-deliverable forwards, the one-month contract was at 54.82, while the three-month was at 55.48.

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 54.55 with a total traded volume of $6.4 billion.

(Editing by Subhranshu Sahu)

FILED UNDER:
Photo

After wave of QE, onus shifts to leaders to boost economy

DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.

OBAMA'S VISIT

Reuters Showcase

Coal Mining

Coal Mining

India to open coal to commercial mining firms soon, minister says  Full Article 

RBI Loan Rules

RBI Loan Rules

RBI relaxes overseas loan recast rules   Full Article 

E-commerce Firms

E-commerce Firms

Amazon, e-commerce rivals fuel commercial property boom in India  Full Article 

Growth Forecasts

Growth Forecasts

Indian economic growth forecasts pegged back, despite rate cuts: Reuters Poll.  Full Article 

Uber is Back

Uber is Back

Uber back in Delhi; govt says must await approval.  Full Article 

Markets at Record

Markets at Record

Sensex rises to record after ECB stimulus programme.  Full Article 

Pharma Sector

Pharma Sector

Ipca Labs hit by FDA ban on plant for standard violations.  Full Article | Related Story 

Forex Reserves

Forex Reserves

India FX reserves at record high as RBI fortifies defences  Full Article 

QE for Euro Zone

QE for Euro Zone

ECB launches 1 trillion euro rescue plan to revive euro economy.  Full Article 

Reuters India Mobile

Reuters India Mobile

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