Rupee gains on debt, share sale inflows; politics a drag

MUMBAI Thu Mar 21, 2013 5:27pm IST

An employee arranges Indian currency notes at a cash counter inside a bank in Agartala, January 29, 2010. REUTERS/Jayanta Dey/Files

An employee arranges Indian currency notes at a cash counter inside a bank in Agartala, January 29, 2010.

Credit: Reuters/Jayanta Dey/Files

Related Topics

MUMBAI (Reuters) - The rupee rose for a second day on Thursday, largely helped by inflows related to a share sale and debt limit auction to foreigners, but the gains lacked conviction on continued political uncertainty.

The impasse in New Delhi was reflected in the continued weakness in shares, which fell for a fifth session to their lowest close in nearly four months, continuing to be a drag on the currency.

Dealers expect the rupee to remain under pressure as the political impasse over a key ally of the government pulling out is yet to be resolved, putting a question mark over the fate of future reforms.

However, the rupee was helped by rumoured inflows related to the government's share sale in Steel Authority of India, due Friday, which is set to garner about $290 million.

Inflows related to a successful sale of debt limits to foreigners also helped the rupee, dealers said.

India's auction of quotas allowing foreign investors to buy bonds attracted strong demand on Wednesday, easing some of the concerns about whether a recent sell-off in markets would reduce demand for domestic debt.

"Stocks have been jittery and edgy. The rupee has not fallen because of the inflows. Once the flows dry out, the undertone will be weak," said Param Sarma, chief executive at NSP Forex.

He expects the rupee to further weaken to 54.80 in April.

The partially convertible rupee closed at 54.2750/2850 per dollar versus 54.36/37 on Wednesday. It traded in a 54.1850-54.3350 band in the session.

In the offshore non-deliverable forwards, the one-month contract was at 54.73 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 closed at around 54.34 with a total traded volume of $5.4 billion.

(Editing by Anupama Dwivedi)

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

REUTERS SHOWCASE

Coal Block Allocation

Coal Block Allocation

Government urges Supreme Court to not cancel some 'illegal' coal mines  Full Article 

Modi in Japan

Modi in Japan

Japan and India agree to boost strategic ties at summit  Full Article 

Basel III Norms

Basel III Norms

RBI amends Basel III guidelines for banks  Full Article 

HSBC PMI

HSBC PMI

Factory activity expands at slower clip in August.  Full Article 

Current Account

Current Account

Balance of payments surplus for third straight quarter  Full Article 

India Infrastructure

India Infrastructure

RBI rule handicaps India's infrastructure hopes  Full Article 

Book Talk

Book Talk

Reema Abbasi and a glimpse of Pakistan’s Hindu past  Full Article 

China Economy

China Economy

Retreat in China's PMIs heightens calls for policy easing.  Full Article 

Managing Share Sales

Managing Share Sales

Govt seeks bids from banks to manage PFC, REC share sales   Full Article 

Reuters India Mobile

Reuters India Mobile

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