* Rupee rises to 54.35/36 per dlr vs 54.68/69 on Tues
* U.S. "fiscal cliff" deal boosts risk assets globally
* Mild dlr buying from oil firms pulls rupee off highs
By Swati Bhat
MUMBAI, Jan 2 The Indian rupee rose to its
strongest against the dollar in nearly three weeks on Wednesday
as optimism over the U.S. "fiscal cliff" deal boosted risk
assets globally, but demand for the greenback from oil firms
pulled the unit off the day's high.
Analysts say the rupee could gain further given the strong
start to the year in domestic stocks anticipating interest rate
cuts from the central bank in January.
However, in the longer-term, concerns about the current
account deficit, which hit a record high in the July-September
quarter and the government's ability to keep its finances under
control could determine the rupee's outlook.
"The short-term is bullish for the rupee but longer-term we
need to watch out for the current account and fiscal deficit
numbers which are presently acting against the rupee," said A.
Ajith Kumar, a senior foreign exchange dealer with Federal Bank.
"But inflows may be there to an extent, so we may see gains
until February or March, before any depreciation," he added.
The partially convertible rupee closed at 54.35/36
per dollar versus its previous close of 54.68/69.
The rupee rose to as high as 54.2650, its strongest
since Dec. 14 during trade but retreated after oil firms, the
biggest buyers of dollars in the domestic currency market,
started purchasing the greenback.
On technical charts, the rupee is seeing good support in the
54.27-33 area, or the 76.4 percent retracement of 54.04-55.25,
or the Dec. 6 to Dec. 21 rally.
India's NSE index rose to a two-year high, breaching the key
psychological level of 6,000 at one point. Foreign funds pumped
in 24.55 billion rupees into the equity market in 2012 and have
been net buyers of shares in the first two days of 2013.
In the offshore non-deliverable forwards, the
one-month contract was at 54.60 while the three-month was at
In the currency futures market, the most-traded near-month
dollar/rupee contract on the National Stock Exchange, the MCX-SX
and the United Stock Exchange all closed at around 54.52 with a
total traded volume of $5.53 billion.
(Additional reporting by Reuters FX analyst Krishna Kumar in
SYDNEY; Editing by Sunil Nair)