Indian rupee edges up; but RBI comments dent sentiment

Thu Jul 4, 2013 5:15pm IST

Related Topics

* Rupee ends at 60.13/14 vs 60.215/225 Wednesday close

* India cbank chief says not to protect any particular FX rate

* INR seen rising around 4 pct to 57.50 in 12 months - Reuters poll

By Subhadip Sircar

MUMBAI, July 4 (Reuters) - The Indian rupee eked out minor gains on Thursday, snapping three sessions of losses, but sentiment was dented after the Reserve Bank of India chief said the bank would not defend any particular exchange rate, which dealers read as likely absence of any heavy intervention.

RBI chief Duvvuri Subbarao's comments on the exchange rate, which would be read as innocuous in other circumstances, led to a sharp sell-off in the rupee, which the market took as a signal that any significant intervention was unlikely despite the currency hovering near record lows.

The absence of any strong comments from the governor to support the rupee was also a dampener for the markets, dealers said.

The rupee is likely to take its next cue from the U.S. non-farm payrolls data, due Friday, which will be an important data point for the Federal Reserve's decision to slow down its bond purchases.

"The RBI governor's comments on not protecting any particular rupee levels and concerns on the deficit did not go down well with the currency market," said Uday Bhatt, a senior manager at UCO Bank.

"The non-farm payrolls data will be the key. If it's strong, the rupee may see 61 levels."

The rupee was supported by a strong stock performance with local stocks gaining 1.2 percent.

The partially convertible rupee closed at 60.13/14, compared with its previous close of 60.215/225. It fell to as much as 60.38 after the governor's comments.

The battered Indian rupee will remain under pressure against the U.S. dollar over the next year as a wide current account deficit and policy inaction dissuades foreign investment into the country, a Reuters poll showed.

In the offshore non-deliverable forwards, the one-month contract was at 60.51, while the three-month was at 61.21.

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 around 60.46 with a total traded volume of $4.9 billion. (Editing by Anand Basu)

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

GROUP OF 20

REUTERS SHOWCASE

Modi Speaks

Modi Speaks

PM Modi says al Qaeda will fail in India - CNN.  Full Article 

Alibaba Listing

Alibaba Listing

Alibaba surges on massive demand in trading debut  Full Article 

Importing Rice

Importing Rice

Top rice exporter India importing over 100,000 T on temporary supply squeeze.  Full Article 

GSK Fined

GSK Fined

China hands drugmaker GSK record $489 mln fine, sentences executives.  Full Article 

HMT in Demand

HMT in Demand

Fans rush to HMT as watchmaker marks time.  Full Article 

Apple Not Cool?

Apple Not Cool?

Some consumers say Apple is losing its "cool" factor  Full Article 

Asian Games 2014

Asian Games 2014

Full coverage of the 17th Asian Games as Incheon.  Full Coverage 

Reuters India Mobile

Reuters India Mobile

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