Rupee weakens; dollar demand from oil, custodian banks hurts

MUMBAI Wed May 8, 2013 5:38pm IST

An employee counts currency notes at a cash counter inside a bank in Agartala August 9, 2011. REUTERS/Jayanta Dey/Files

An employee counts currency notes at a cash counter inside a bank in Agartala August 9, 2011.

Credit: Reuters/Jayanta Dey/Files

Related Topics

MUMBAI (Reuters) - The rupee remained in a tight range on Wednesday as positive sentiment due to stronger Asian currencies and the euro was offset by choppy domestic shares and demand for the greenback from custodian banks and oil importers.

Most Asian currencies gained as strong trade data from China and a record yuan boosted sentiment.

However, the rupee failed to benefit as much given Indian shares were volatile for most of the session, leading to dollar demand from custodian banks.

The rupee did not gain much even as a late spurt led the BSE Sensex to a new three-month closing high, with mortgage lender HDFC Ltd hitting a record high after its earnings beat estimates.

"The rupee was closely tracking stocks and the euro today. Later we also saw some oil bids in the market," said A. Ajith Kumar, a foreign exchange dealer with Federal Bank.

"The next key support for the dollar/rupee is at 54.05 while 54.15 will pose some resistance," Kumar added, predicting a range of 53.90 to 54.25 for Thursday.

The partially convertible rupee closed at 54.16/17 per dollar, little changed from 54.1350/1450 on Tuesday, after moving in a thin range of 54.04 to 54.19 during the session.

Traders said volumes in the market were also slightly below normal in the absence of any large flows.

Investors are expected to shift their focus to the consumer price index and industrial production data on Friday, which will be followed by wholesale inflation data on Monday, dealers said.

The data comes as India cut short the budget session of parliament on Wednesday, two days ahead of its scheduled close and without passing major reforms like the food security and the land acquisition bills.

However, concerns about political instability could ease somewhat as India's ruling Congress party was set for a resounding election victory in the southern state of Karnataka on Wednesday, according to early results.

In the offshore non-deliverable forwards, the one-month contract was at 54.26 while the three-month was at 54.78.

In the currency futures market, the most-traded near-month dollar/rupee contract on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed at around 54.18 with a total traded volume of $3.4 billion.

(Editing by Anupama Dwivedi)

FILED UNDER:

Reuters Showcase

GDP Growth

GDP Growth

India revises up 2013/14 GDP growth to 6.9 percent.  Full Article 

Pharma Deal

Pharma Deal

Sun Pharmaceutical wins U.S. approval to buy Ranbaxy  Full Article 

Adani Restructuring

Adani Restructuring

Adani hives off power, ports businesses to boost growth.  Full Article 

Bank of Baroda

Bank of Baroda

Q3 net profit down 69 pct on higher provisions  Full Article 

Trading Fees

Trading Fees

BSE slashes fees in FX derivatives battle with NSE  Full Article 

SpiceJet Turnaround

SpiceJet Turnaround

SpiceJet board approves up to $243 mln share sale plan  Full Article 

Currency Market

Currency Market

RBI urges companies to hedge FX exposure  Full Article 

Banking Sector

Banking Sector

Banks say no room to cut lending rates, thwarting RBI easing  Full Article 

Reuters Poll

Reuters Poll

RBI seen holding rates steady on Tuesday, minority of analysts expect cut  Full Article 

Reuters India Mobile

Reuters India Mobile

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