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

Rajalakshmi (C), 28, smiles after winning the Miss Wheelchair India beauty pageant in Mumbai November 26, 2014. REUTERS/Danish Siddiqui

Miss Wheelchair India

Seven women from across India participated in the country's second wheelchair beauty pageant, which aims to open doors for the wheelchair-bound in modelling, film and television, according to organisers  Slideshow 

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:

SAARC Summit

REUTERS SHOWCASE

E-Commerce Boom

E-Commerce Boom

Online grocers come up trumps in India's e-commerce boom   Full Article 

Reuters Poll

Reuters Poll

GDP growth to slow to 5.1 pct, but no rate cut yet  Full Article 

Oil Prices Fall

Oil Prices Fall

Oil at four-year low as OPEC production cut looks unlikely  Full Article 

Google in Europe

Google in Europe

Insight - Behind Google's Europe woes, American accents  Full Article 

Vodafone Tax Dispute

Vodafone Tax Dispute

India advised against challenging Vodafone tax ruling - source  Full Article 

India-focused Funds

India-focused Funds

India-focused hedge funds up over 40 pct YTD - HFR  Full Article 

Trade Deal

Trade Deal

WTO postpones trade deal by a day after last-minute objection.  Full Article 

RBI Rate Hopes

RBI Rate Hopes

Markets pricing in rate cut, despite wary RBI  Full Article 

Land Disputes

Land Disputes

Disputes over land for industry on the rise in India, angering locals - charities  Full Article 

Reuters India Mobile

Reuters India Mobile

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