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

Fuelling Change

REUTERS SHOWCASE

NSEL Fraud

NSEL Fraud

Govt orders Financial Tech to absorb NSEL, liabilities  Full Article 

Stalemate

Stalemate

WTO prepares for crisis talks as India keeps veto on global deal.  Full Article 

Deal Talk

Deal Talk

Smartphone repair company B2X steps up expansion with Indian deal.  Full Article 

Earnings Season

Earnings Season

HDFC Bank eyes pickup in corporate credit.  Full Article 

JLR China

JLR China

JLR sees 20 percent growth in China sales this year - exec  Full Article 

Iron Ore Imports

Iron Ore Imports

JSW Steel to boost iron ore imports by up to 80 percent.  Full Article 

Pollution Levels

Pollution Levels

Delhi braces for worst air quality this Diwali week.  Full Article 

Remembering Margerie

Remembering Margerie

Total’s "Big Moustache"- bon vivant, deal-maker and risk-taker .  Full Article 

Reuters India Mobile

Reuters India Mobile

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