* Rupee ends at 54.43/44 dlr vs 54.60/61 on Mon
* Dollar sales by pharma, IT firms seen
* RBI Gov Subbarao says rate cut in Dec unlikely
By Swati Bhat
MUMBAI, Nov 6 The Indian rupee retreated from
one-and-half month lows hit early in the session to close
stronger on Tuesday boosted by corporate dollar sales and a mild
recovery in the domestic stock markets.
The outlook for the rupee remains uncertain, as the currency
continues to reel from the disappointment after the Reserve Bank
of India kept interest rates on hold on Oct. 30, signalling any
monetary easing would not come until the January-March quarter.
That stance was confirmed by central bank governor Duvvuri
Subbarao in an interview with Reuters on Monday, saying a rate
cut at its next policy review in December was "highly
"Yesterday the break of 54.20 triggered stop-losses. Today
morning the market felt USD/INR may move towards 55.00, but the
rupee is getting tougher to predict," said Paresh Nayar, head of
fixed income and forex trading at First Rand Bank.
"The impact of the U.S. elections may be felt on the euro
and that would influence the rupee as well. But feel there will
be good offers to sell between 54.50-54.80 levels," he added.
The partially convertible rupee closed at 54.43/44
per dollar as per the SBI closing rate, versus its previous
close of 54.60/61.
Some drug makers and technology firms were spotted selling
dollars in the second half of the session, helping the rupee
recover from a more than one-and-half month low of 54.7850
touched earlier in the session, traders said.
Dollar sales from custodian banks were also seen, according
to dealers. Foreign investors have bought more than $18 billion
worth of shares so far in 2012.
India's main indexes rose for a fifth consecutive session on
Tuesday, as drug maker Cipla jumped after posting a surge in
quarterly earnings, while State Bank of India rose on hopes for
rising demand for loans in the holiday season.
Traders will closely monitor the U.S. election outcome for
direction, while a parliamentary vote in Greece on budget and
labour reforms on Wednesday will also be key.
Still, longer-term, the prospect of the rupee will likely be
determined by the domestic fiscal and economic outlook.
Investors are watching how much in additional borrowing the
government will announce for the fiscal year as it seeks to
contain the fiscal deficit at 5.3 percent, wider than its
initial target of 5.1 percent.
India's widening current account and fiscal deficits, and
worries about growth, had been key factors that had sent the
rupee to a record low in late June.
In the offshore non-deliverable forwards market, the
one-month contract was at 54.77 while the three-month was at
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 54.71 with a
total traded volume of around $4.9 billion.
(Editing by Rafael Nam)