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MARKET EYE-State-run banks' dollar demand trims INR gains
January 22, 2013 / 8:59 AM / 5 years ago

MARKET EYE-State-run banks' dollar demand trims INR gains

* Dollar demand from state-run banks erases most of the Indian
rupee's early gains.
* USD/INR is at 53.64/65, pulling back from the day's
low of 53.375 following the government's announcement of raising
import duty on gold, a key source of dollar demand after oil in
India. The pair had closed at 53.765/775 on Monday. 
* "Market went excessive short in the morning. So there is some
covering up now," says a dealer with a foreign bank.
* India has raised the import tax on gold by 2 percentage points
to 6 percent to curb purchases and rein in a ballooning fiscal
deficit, but industry officials expect only a moderate drop in
demand.  
* However, the rupee has turned the corner and is seen on a
strengthening trend following the recent fiscal and financial
reforms undertaken by the government, dealers say.

 (suvashree.dchoudhury@thomsonreuters.com/suvashree.dchoudhury.t
homsonreuters.com@reuters.net)

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