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State-run banks' dollar demand trims rupee gains

Source : REUTERS
Last Updated: Tue, Jan 22, 2013 09:44 hrs
An employee arranges Indian currency notes at cash counter inside a bank in Agartala

Dollar demand from state-run banks erases most of the rupee's early gains. The rupee is at 53.64/65, pulling back from the day's high of 53.375 following the government's announcement of raising import duty on gold, a key source of dollar demand after oil in India. The pair had closed at 53.765/775 on Monday.

"Market went excessive short in the morning. So there is some covering up now," says a dealer with a foreign bank.

India has raised the import tax on gold by 2 percentage points to 6 percent to curb purchases and rein in a ballooning fiscal deficit, but industry officials expect only a moderate drop in demand.

However, the rupee has turned the corner and is seen on a strengthening trend following the recent fiscal and financial reforms undertaken by the government, dealers say.

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  Cities   Price (10g)
  Chennai   Rs. 24500.00 (-0.33%)
  Mumbai   Rs. 25480.00 (-0.08%)
  Delhi   Rs. 25200.00 (0%)
  Kolkata   Rs. 25000.00 (0%)
  Kerala   Rs. 24400.00 (-0.41%)
  Bangalore   Rs. 24450.00 (0%)
  Hyderabad   Rs. 24580.00 (0%)
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