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:
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

Record Highs

Record Highs

BSE Sensex, Nifty hit record highs, insurers gain  Full Article 

Global Growth

Global Growth

IMF cuts outlook, warns of stagnation risk in rich nations  Full Article 

Monsoon Revives

Monsoon Revives

Monsoon revival keeps rain above average   Full Article 

Wipro Results

Wipro Results

Firm sees strong sales growth, eyes Europe deals   Full Article 

Scourge of Inflation

Scourge of Inflation

Markets' post-election enthusiasm lost on consumers  Full Article 

Just Not Enough

Just Not Enough

Amazon's smartphone fails to kindle a "Fire" among reviewers.  Full Article 

Rising Market Value

Rising Market Value

Facebook goes express to mega-cap status  Full Article 

Mining Roadblock

Mining Roadblock

Coal India's plans for 20 mines hit by land, environment delays  Full Article 

Power Jolt

Power Jolt

UAE's TAQA pulls out of India power plant deal with Jaiprakash  Full Article 

Reuters India Mobile

Reuters India Mobile

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