* Rupee falls for third session; global risk assets hit
* 3-mth NDF at 57.20, not far off record low for spot INR
* Policy reforms key to bolster rupee sentiment
By Subhadip Sircar
MUMBAI, July 24 The Indian rupee fell on Tuesday
to its lowest this month, as worries about the euro zone crisis
continues to hit global risk assets such as the euro, while
investors grow warier after still waiting for government word on
Dollar sales from a telecoms company helped the rupee
earlier in the session, but otherwise the local currency traded
within a range, reacting mainly to euro movements given the
absence of any domestic policy triggers.
Hopes the government would act on long-stalled reforms such
as opening up the aviation and retail sectors to foreign
investment, or raising diesel prices, had sparked a rally in the
rupee from its record low against the dollar in late June.
However, recent signs of opposition from government allies
are leading to some caution, as reflected in the weakening of
the rupee and in non-deliverable forward markets.
"The market is waiting for roll out of policies by the
government, especially in the area of FDI," said N. S.
Venkatesh, treasurer at IDBI Bank.
The partially convertible rupee fell for a third
consecutive session, closing at 56.12/13 per dollar, as per the
SBI closing rate from its close of 55.9650/9750
The rupee earlier fell to a session low of 56.17, its lowest
since June 29.
Global risk sentiment will dictate the rupee's moves in the
near-term, dealers said.
The euro fell against the dollar on Tuesday after weak
German economic data fueled concerns about slowing growth in
Europe's largest economy, and looked likely to extend losses on
mounting concerns Spain may need a full bailout.
In India, action from the government would be key to bolster
confidence in the rupee, especially as worries mount that the
crucial monsoon rains will be below average.
Offshore traders are also starting to price in a potentially
One-month offshore non-deliverable forward contracts
were around 56.51, while the three-month was at 57.20, not far
off the record low 57.32 for spot rupee hit last month.
In the currency futures market, the most-traded near-month
dollar-rupee contracts on the National Stock Exchange, the
MCX-SX and United Stock Exchange all closed at around 56.24,
with the total traded volume at around $5.1 billion.
(Editing by Rafael Nam)