* Rupee ends at 54.2050/2150 per dlr vs 54.43/44 on Tues
* Custodian banks seen selling dlrs; shares rise 0.5 pct
* INR may rise more and stabilise around 53/dlr by Dec-IDBI
By Swati Bhat
MUMBAI, Nov 7 The Indian rupee strengthened for
a second straight session on Wednesday, recovering further from
a one-and-half month low hit in the previous session, as U.S.
President Barack Obama's re-election to a second term boosted
risk assets globally.
Traders expect the United States to continue with its
quantitative easing programme, which would ensure adequate
dollar liquidity and boost risk assets and aid the rupee.
"The U.S. election uncertainty is out of the way and to that
extent there is a risk-on mood. Foreign funds would continue to
chase high interest rate assets in countries like India and to a
small extent it will support the India growth story," said N.S.
Venkatesh, treasurer at IDBI Bank.
"I think rupee should stabilise around current levels, trade
range-bound between 53 to 54.50 levels for now and end the year
around 53-53.50. The only risk to this view is the reform
process getting delayed," he added.
India will likely miss its revised fiscal deficit target for
the financial year ending in March, a Reuters poll showed,
putting a question mark over the country's efforts to avert a
credit rating downgrade.
The main indices rose for a sixth session on Wednesday,
marking their highest close in near 4-1/2 weeks, as State Bank
of India rose on hopes of better asset quality in September
quarter results, while other lenders such as ICICI Bank rose in
anticipation of better loan growth in the holiday season.
The partially convertible rupee closed at
54.2050/2150 per dollar, 0.4 percent stronger than its previous
close of 54.43/44. The pair moved in a range of 53.9650 to
54.3750 during the session.
On Tuesday, the rupee had dropped to as low as 54.7850, its
weakest since Sept. 14.
Traders said some dollar selling was also seen from
corporates but importers stepped into the absorb the flow around
54 levels, preventing further gains.
"Price action seems to suggest some short-covering took
place today. Now that the positions are cleaner, and with the
U.S. elections behind us, looks like people willing to test
downside again," the head of forex trading at a foreign bank
"There were some custodian banks who sold today. I would
think unless we see the global sentiment sour, we could test
levels lower than 53.50-53.20," he added.
In the offshore non-deliverable forwards segment, the
one-month contract was at 54.52 while the three-month was at
In the currency futures market, the most-traded near-month
dollar/rupee contract on the National Stock Exchange and the
MCX-SX closed at around 54.38 with a total traded volume of $6.4
(Editing by Sunil Nair)