* Rupee ends at 55.45/46 per dollar vs prev close of
* Custodian banks sell dollar with stocks hitting 2-1/2 wk
* Large dollar buying by oil firms prevents further gains
By Swati Bhat
MUMBAI, Nov 27 The Indian rupee snapped a
five-day losing streak on Tuesday as custodian banks sold
dollars on the back of sharp gains in the domestic share market,
but persistent dollar demand from oil refiners to meet month-end
requirements capped the gains.
Traders are also hopeful the government would succeed in
pushing through key reforms in the winter session, despite the
parliament having been adjourned for a fourth day.
Moody's also reiterated that its outlook on India's
sovereign rating of Baa3 remains stable, citing the country's
high savings and investment rates.
"The way the rupee had been moving for the past few days it
appeared that we might have hit 56 today itself, but it received
some respite from gains in stocks and the euro," said Paresh
Nayar, head of fixed income and forex trading at First Rand
"There seem to have been good custodian flows today. Demand
from oilers was persistent since the last few days. Trade
deficit numbers will be crucial now. Market could see a wide and
choppy range of 54.30 and 56.20 in the next few days," Nayar
Indian shares posted their biggest daily gain in
more than two months as investor sentiment turned positive on
growing hopes the government would push through reforms to
stimulate growth and avoid a ratings downgrade.
The partially convertible rupee closed at 55.45/46
per dollar up 0.5 percent versus its previous close of 55.73/74
Foreign fund flows into and out of the share market have a
huge influence on the rupee's fortunes. Foreign funds have
bought shares worth more than $19 billion so far in 2012 but the
rupee remains down about 4.3 percent.
Traders said oil refiners, the biggest buyers of dollars in
the domestic currency market have been buying continuously over
the last few days to meet their month-end import commitments,
hurting the rupee.
Lack of dollar inflows had also exaggerated the fall due to
oil demand, traders said. The central bank is expected to step
in and sell dollars to prevent the rupee from slipping below 56,
Euro's gains versus the dollar also aided the rupee. The
euro bounced to a one-month high against the dollar on Tuesday
after international lenders agreed a new debt target for Greece,
but eased back after a Fed policymaker's comments boosted the
In the offshore non-deliverable forwards market, the
one-month contract was at 55.72 while the three-month was at
In the currency futures market, the most-traded
near-term dollar/rupee contracts on the National Stock Exchange,
the MCX-SX and the United Stock Exchange all closed at around
55.7250 with a total traded volume at around $5.97 billion.
(Editing by Anand Basu)