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

Press Event

Press Event

Modi takes tea, but no questions, in first press event as PM.  Full Article 

Monetary Policy

Monetary Policy

Finance Minister Arun Jaitley favours interest rate cut - paper  Full Article 

Sundar Pichai Elevated

Sundar Pichai Elevated

Google's Pichai to oversee major products and services.  Full Article 

Reuters Poll

Reuters Poll

India's growth pace to pick up as reforms draw investment   Full Article 

Need For Reforms

Need For Reforms

Euro zone risks "relapse into recession" without structural reforms - Draghi.  Full Article 

Diwali Sales

Diwali Sales

Gold sales jump about 20 pct for Diwali - trade body  Full Article 

World Bank Rival

World Bank Rival

Three major nations absent as China launches W.Bank rival in Asia  Full Article 

Health Of Lenders

Health Of Lenders

25 European banks set to fail health checks - sources.  Full Article 

Reuters India Mobile

Reuters India Mobile

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