Indian rupee hits near 2-month low; ends marginally stronger
* Rupee ends at 54.86/87 per dlr vs 54.90/91 on Friday
* Dollar sales by exporters help INR recover
* Rupee seen in a 54.60-55.50 range until end-March - trader
By Swati Bhat
MUMBAI, March 4 (Reuters) - The Indian rupee hit the lowest level in nearly two months on Monday before closing marginally stronger with exporter and corporate dollar sales aiding the recovery, though sentiment continues to remain bearish in the near term.
Traders said disappointment over the budget last week is likely to hurt the rupee in the near term with fundamentals such as a record current account deficit likely to keep the downward pressure on the currency.
On Thursday, India unveiled a surge in government spending despite expectations of an austerity budget to shore up its finances, while failing to announce any measures that would significantly boost investments.
"Initial weakness in the rupee was due to the budget disappointment. The flows helped the rupee recover despite euro and share weakness, but we may target 55.50 later this week," said Subramanian Sharma, director at Greenback Forex.
"Any small corrections will be seen as an opportunity to buy with importers rushing in to cover. I am broadly expecting a range of 54.60 to 55.50 till March-end with the bias on the weaker side," he added.
The partially convertible rupee closed at 54.86/87 per dollar versus its previous close of 54.90/91 on Friday. The unit dropped earlier to a low of 55.15, the weakest since Jan. 8.
Traders said the pair opened sharply below the 55 mark, having closed above the 200-day moving average on Friday and after breaking the 61.8 percent Fibonacci retracement of the November to February decline at 54.74.
However, USD/INR should see good technical resistance at around 55.15, ahead of the 55.89 peak in November.
Traders said the weakness in the euro and domestic shares also hurt the rupee though good dollar selling by exporters and a corporate helped it recover.
The euro fell to a session low on Monday and not far from a 2-1/2 month trough after eurozone sentiment tumbled in March and added to speculation that the European Central Bank may lower rates in the near term.
Indian shares fell to near 3-month lows as global risk aversion sparked broad-based selling in domestic blue chips.
In the offshore non-deliverable forwards, the one-month contract was at 55.30 and the three-month was at 55.92.
In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the National Stock Exchange all closed at 55.13 with a total traded volume of $5.9 billion. (Editing by Jijo Jacob)
- Tweet this
- Share this
- Digg this
Trending On Reuters
Prime Minister Narendra Modi has taken direct control of a project-monitoring body to fast-track investments worth almost $300 billion and revive manufacturing in the country, two officials with direct knowledge of the matter told Reuters. Full Article