Rupee see-saws; state-bank dollar buying, weak shares hurt
The rupee continued its see-sawing trend and weakened marginally on Thursday as losses in domestic shares weighed despite the sharply lower-than-expected retail inflation print for October.business Updated: Nov 13, 2014 18:09 IST
The rupee continued its see-sawing trend and weakened marginally on Thursday as losses in domestic shares weighed despite the sharply lower-than-expected retail inflation print for October.
India's economic outlook brightened on Wednesday with a surprise pick-up in industrial output and further cooling in consumer prices, data showed, boosting Prime Minister Narendra Modi's bid to end the longest slowdown in growth in decades.
Dealers said state-run banks were spotted buying the greenback on a sustained basis in both the spot and forward markets.
Some suspected this buying could have been on behalf of the Reserve Bank of India, which is likely to wary of excessive appreciation of the rupee in an attempt to maintain export competitiveness.
Asian currencies too were broadly weaker compared to the dollar. "The rupee is ideally going to stay in a 60.50 to 62.50 range for the next few months. But seeing the price action, any negative news on rupee and the Indian economy may push the rupee towards 66 levels," said Vikas Babu Chittiprolu, a senior foreign exchange trader with state-run Andhra Bank.
"There is however not much reason to panic and it is important to note that the RBI is better prepared and in complete control of the rupee situation and unlikely to allow a repeat of the last year trauma," he added.
The partially convertible rupee closed at 61.5450/5600 per dollar compared with 61.4925/5000 on Wednesday. Indian shares fell on Thursday, retreating from a record high hit in the previous session as state-run oil companies such as Bharat Petroleum Corp declined after the government raised factory gate taxes on petrol and diesel.
Foreign fund buying of local shares and debt in recent sessions however has been a key boost for the local unit. So far in November, foreign funds have bought shares worth $1.44 billion and debt worth $613 million, taking total inflows so far this year to $15.1 billion and $23.2 billion in the two asset classes respectively.
In the offshore non-deliverable forwards, the one-month contract was at 61.74/84, while the three-month was at 62.30/40.
First Published: Nov 13, 2014 09:54 IST