* Rupee ends at 53.2150/2250 per dlr vs 53.30/31 on Wed
* Market waiting to see foreign appetite for govt stake sale
* Rupee best-performing currency in Asia so far in 2013
By Swati Bhat
MUMBAI, Jan 31 The Indian rupee strengthened
slightly against the dollar on Thursday after earlier hitting a
three-and-a-half month high, while posting its first monthly
gain in four on the back of heavy dollar inflows into the
domestic equity and debt markets.
Foreign funds bought shares and bonds of more than $4
billion until the second-last day of the month, helping the
rupee gain 3.3 percent, and easing concerns about India's
current account deficit.
The strong inflows have come in a month in which the
government announced additional fiscal and economic reforms,
including allowing diesel prices to rise further and imposing
duties on gold imports, shoring up confidence in the economy.
The central bank this week also delivered its first
interest-rate cut in nine months, sparking more optimism about
economic growth, although it was cautious on future monetary
"I think there is a lot of scope for a further rally in the
rupee, 53.35 was a crucial support and now the next support is
closer to 53," said Naveen Raghuvanshi, associate vice-president
with Development Credit Bank.
"Over the next fortnight, the rupee may touch 53 if not
break it, as there will be lot of dollar demand emerging around
that mark. Broadly, the rupee should hold in a 53.10 to 53.40
The partially convertible rupee closed at
53.2150/2250 per dollar versus its previous close of 53.30/31.
It earlier hit 53.07, its strongest since Oct. 18. The rupee
posted its first monthly gain in four and is the best-performing
currency in Asia so far in 2013.
Traders, however, said there was strong resistance seen due
to residual month-end dollar demand from importers, while oil
firms were also seen buying aggressively as current levels are
Domestic shares fell on Thursday, led by ICICI Bank
, which was hit by profit-taking after beating
forecasts with its quarterly earnings.
Investors are now focusing on the budget for the next fiscal
year to be unveiled in late February. Finance Minister P.
Chidambaram has promised to stick to the government's fiscal
The Indian government will shed 10 percent in Oil India
through an auction on Friday, ahead of a stake sale in
NTPC on Feb. 7.
"The fireworks are likely to start tomorrow with respect to
dollar inflows," Development Credit Bank's Raghuvanshi said.
India's fiscal deficit during the
April-December period was 4.07 trillion rupees ($76.22 billion),
or 78.8 percent of the budgeted full fiscal year 2012/13 target,
government data showed on Thursday.
The possibility of India losing its investment grade credit
rating has receded somewhat as a result of economic reforms by
the government since last September, an analyst with rating
agency Standard & Poor's told Reuters on Thursday.
In the non-deliverable forwards, the one-month
contract was at 53.44, while the three-month was at 54.01.
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
53.4050 with total traded volume of $5.5 billion.
(Editing by Prateek Chatterjee)