* USD/INR ends at 54.3550/3650 vs 54.30/31 on Wednesday
* February core inflation eases to 3.8 pct - analysts
* Stocks end 3-day losing streak, up 1.1 pct
By Subhadip Sircar
MUMBAI, March 14 The Indian rupee fell on
Thursday, dragged by a late fall in the euro, giving up gains
accrued after data showed core inflation eased and the central
bank governor was seen by investors as endorsing the
government's 2013/14 budget.
The euro fell to a three-month low against a broadly buoyant
dollar as economic and political concerns in the euro zone
contrasted a string of positive data from the United States.
Earlier, Reserve Bank of India chief's comments on the budget
and a drop in core inflation raised hopes that the central bank
will cut interest rates next week.
The currency made gains after non-food manufacturing
inflation, which the central bank uses to gauge demand-driven
price pressures, slowed to 3.8 percent in February, the weakest
pace since March 2010.
That helped offset initial concerns after data showed
headline inflation had risen more than expected.
Sentiment improved after RBI Governor Duvvuri Subbarao,
speaking in London on Wednesday, called the federal budget
"responsible," a comment that buoyed markets given that the
central bank had expressed concerns about fiscal deficit
"USD/INR sold off after the inflation data. The market took
solace from lower core inflation number," said Hari
Chandramgethen, head of forex trading at South Indian Bank.
The partially convertible rupee closed at
54.355/365 per dollar versus its previous close of 54.30/31. The
local unit traded in a 54.17-54.5325 band in the session.
The rupee was also helped by gains in Indian shares, with
the benchmark BSE index ending up 1.1 percent on the
With the inflation data out, the focus will shift to the
RBI's policy review on March 19. A rate cut, the central bank's
second easing this year, would help improve confidence about
economic growth, potentially sparking gains in the rupee.
In the offshore non-deliverable forwards, 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
around 54.53 with a total traded volume of $6.2 billion.
(Editing by Jijo Jacob)