Rupee falls on stock losses; inflation data key

MUMBAI Wed Mar 13, 2013 5:29pm IST

Rupee notes of different denominations are seen in this picture illustration taken in Mumbai April 30, 2012. REUTERS/Vivek Prakash/Files

Rupee notes of different denominations are seen in this picture illustration taken in Mumbai April 30, 2012.

Credit: Reuters/Vivek Prakash/Files

Related Topics

Stocks

   

MUMBAI (Reuters) - The rupee fell on Wednesday after earlier hitting a two-week high as caution ahead of inflation data hit domestic shares while state-run banks were spotted buying dollars, which traders attributed to government purchase needs.

India is due to release wholesale price inflation data on Thursday, with analysts expecting a 6.54 percent rise in February, the slowest annual pace in more than three years.

Data at that level or below would significantly boost the chances the Reserve Bank of India (RBI) would cut interest rates on March 19, after data earlier this week showing stronger-than-expected industrial output and accelerating consumer inflation appeared to cloud the picture.

"The downside in equities and euro as well as local oil demand hurt the rupee. The inflation data will be key and a lower number will be positive for the rupee," said Uday Bhatt, a forex dealer at UCO Bank.

The partially convertible rupee closed at 54.30/31 per dollar versus its previous close of 54.175/185. The local unit rose to as high as 54.02 during the session, a level last seen on February 28.

The rupee's gains earlier in the session were driven by dollar selling by a large petrochemical company, said dealers.

However, the currency ran into a key resistance at 54.02, the 50 percent Fibonacci retracement on the rise from February 6 level of 52.87 to March 4 level of 55.15.

The rupee erased its gains as domestic shares fell ahead of Thursday's WPI data, with the benchmark BSE Sensex ending down 1 percent, in its biggest one-day percentage fall this month.

Dollar buying by state-run banks put further pressure on the rupee, according to dealers.

In the offshore non-deliverable forwards, the one-month contract was at 54.72, while the three-month was at 55.35.

In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed at around 54.49 with a total traded volume of $5.1 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

India Economy

REUTERS SHOWCASE

Reliance Projects

Reliance Projects

Exclusive: Reliance plans $13 billion projects including new refinery.  Full Article 

Pharma Sector

Pharma Sector

In race for bigger margins, drug makers willing to lose the India "advantage".  Full Article 

Low Stocks

Low Stocks

Indian power station coal stocks lowest since 2012 blackouts.  Full Article 

Markets This Month

Markets This Month

Tata Motors, M&M top Sensex gainers  Full Article 

Google Drones

Google Drones

Google is testing unmanned drones to deliver anything from dog food to medicine.  Video 

#RiceBucketChallenge

#RiceBucketChallenge

In India, rice replaces ice in bucket challenge.  Full Article 

Reuters India Mobile

Reuters India Mobile

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