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Indian rupee gains; possible spectrum auction-related dlr sales
February 3, 2014 / 12:11 PM / in 4 years

Indian rupee gains; possible spectrum auction-related dlr sales

* Rupee ends at 62.56/57 vs Friday’s close at 62.68/69

* India begins mobile spectrum sale

* Benchmark index ends down 1.5 pct, lowest close in two-and-half months

By Subhadip Sircar

MUMBAI, Feb 3 (Reuters) - The Indian rupee gained on Monday, snapping two sessions of losses, spurred by late dollar selling by foreign banks, likely for mobile phone operators bidding for spectrum in an auction.

That helped offset the currency’s earlier losses during the day as fears of foreign funds selling out of risk assets continued to beat down emerging market stocks and currencies.

Emerging markets remained under pressure due to fears of the Federal Reserve’s wind down in monetary stimulus and concerns about an economic slowdown in China, where data on Saturday showed manufacturing growth easing to a six-month low.

Overseas funds have sold a net $523 million in shares over the past six sessions, sending the benchmark BSE index on Monday to a nearly 2-1/2 month low. They also sold a net $1.16 billion in debt in the eight sessions to Friday.

The United States should be more aware of how its policies affect the rest of the world, Reserve Bank of India Governor Raghuram Rajan said late on Friday, a day after complaining that global monetary policy co-ordination had broken down.

“Though there is still a pressure on the currencies of emerging markets, USD/INR was sold off in anticipation of the 2G auction results,” said Pramod Patil, assistant vice-president at United Overseas Bank.

Dealers said likely spectrum action-related flows by a large foreign bank helped a sharp spurt in the rupee in late trades.

The government is expecting to garner $1.8 billion in spectrum sale as it seeks to fund its current account gap.

The partially convertible rupee closed at 62.56/57 per dollar compared with Friday’s close of 62.68/69.

The benchmark BSE index ended 1.5 percent lower, marking its lowest close since Nov. 13, in line with falls in the rest of Asia.

Meanwhile, a private survey showing Indian factories started 2014 on a high note also helped support the rupee. The HSBC Manufacturing Purchasing Managers’ Index, compiled by Markit, bounced to 51.4 in January, its highest since March, from 50.7 in the previous month.

In the offshore non-deliverable forwards, the one-month contract was at 63.17, while the three-month was at 64.08.

FACTORS TO WATCH * Euro hits 2-mth low versus dollar on talk of ECB action * China PMI keeps mood glum, Hungary weak * Euro dogged by ECB talk, EM sell-off grinds on * Foreign institutional investor flows * For data on currency futures

DIARIES & DATA: Indian Data Watch European diary Indian diary US Diary (Editing by Sunil Nair)

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