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:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Market Eye

Sensex, Nifty rise to second consecutive record high

Sensex, Nifty rise to second consecutive record high

The BSE Sensex and Nifty on Friday rose to their second consecutive record highs. The 30-share Sensex surged as much as 1.52 percent to an all-time high of 27,762.13. The broader Nifty gained as much as 1.49 percent to a record of 8,291.65.  Full Article 

REUTERS SHOWCASE

Ban on E-Cigs?

Ban on E-Cigs?

Govt considers ban on e-cigarettes, sale of single smokes.  Full Article 

Commodities

Commodities

Silver futures in India hit four-year low on global cues.  Full Article 

BOJ Policy

BOJ Policy

BOJ shocks markets with surprise easing as inflation slows.  Full Article 

Cost Cutting

Cost Cutting

PM Narendra Modi boots officials out of the first class cabin  Full Article 

Leisure Riding

Leisure Riding

Harley-Davidson woos affluent young Indians with bike culture  Full Article 

Shadow Banking

Shadow Banking

China's shadow banking sector growing rapidly, third largest in world - FSB.  Full Article 

Moody's on India

Moody's on India

Moody's welcomes India's policy steps, but wants to see more.  Full Article 

Reuters India Mobile

Reuters India Mobile

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