Indian rupee falls on heavy dollar demand from gold importers

Mon Apr 22, 2013 5:13pm IST

Related Topics

* Rupee ends at 54.14/15 per dlr vs 53.96/97 on Thursday

* Dealers cite USD outflows related to a gas utility

* RBI likely to cut rates by 25 bps on May 3 - Reuters Poll

By Subhadip Sircar

MUMBAI, April 22 (Reuters) - The Indian rupee fell on Monday as gold and crude oil importers bought dollars to meet payment obligations, with dealers also citing outflows related to a gas utility.

Some dealers pegged the dollar outflows related to the gas utility at $150-$200 million.

The currency had hit a six-week high last week as a continued slump in global crude oil and gold prices raised hopes that India will be able to bridge its current account gap.

Lower commodity prices will also help ease inflation and help the central bank to cut rates at its May 3 review.

A Reuters poll released on Monday showed the central bank is likely to cut the repo rate by 25 basis points next month, its third such cut this year.

Finance Minister P. Chidambaram said on Wednesday he expected the country's current account deficit for the 2012/13 fiscal year ended March to be around 5 percent of gross domestic product and perhaps half that amount in one to two years.

The partially convertible rupee closed at 54.14/15 per dollar, weaker than its close of 53.96/97 on Thursday. The pair moved in a range of 53.92 to 54.2450 during the session.

Indian financial markets were shut on Friday for a local holiday.

Technical charts showed the rupee had an immediate support at the 54.30-35 range, around its previous resistance level of 54.34 on April 12.

"There is heavy demand from gold importers after prices fell. The bias is towards rupee appreciation, but there seems to be a lot of dollar demand at current levels," said Sudarshan Bhat, head of forex trading at Corporation Bank.

He expects the rupee to trade in a band of 53.50-54.50 for the week.

Gold traders in India, the world's biggest buyer of the metal, continued to pick up bargains for a second consecutive week fearing further price rise, after prices rose nearly 1 percent from the lowest level in more than 18 months.

An 11 percent slump in gold prices since last week released years of pent-up demand, resulting in a supply shortage in the physical market, triggering higher premiums.

The rupee's losses were also kept in check by gains in local stocks which closed at their highest level in a month.

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 54.1150 with a total traded volume of $5.5 billion. (Editing by Subhranshu Sahu)

FILED UNDER:
  • Most Popular
  • Most Shared

Reforms Plan

REUTERS SHOWCASE

Border Talks

Border Talks

India names Ajit Doval as special envoy for China border talks.  Full Article 

WTO Deal

WTO Deal

U.S. seeks to step up India trade talks  Full Article 

Phone Masts

Phone Masts

American Tower to buy Bharti Nigeria phone masts for $1.1 billion  Full Article 

Infrastructure Plan

Infrastructure Plan

India targets private cash to build railways to its ports.  Full Article 

Shadow Banking

Shadow Banking

Reserve Bank planning more measures for NBFCs.  Full Article 

Auto Sector

Auto Sector

Hyundai Motor, Kia Motors lift 2014 global sales target on China, emerging markets  Full Article 

Oil Prices

Oil Prices

Some fund managers see oil falling to $60 without OPEC cut.  Full Article 

Project Shelved

Project Shelved

Jindal Steel shelves $10 bln project after coal setback.  Full Article 

Market Eye

Market Eye

Sensex, Nifty rise to record after China, ECB stimulus boosts risk appetite.  Full Article 

Reuters India Mobile

Reuters India Mobile

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