WebSify
Follow us on
Mail
Print

Rupee snaps three-day gains as euro falters

Source : REUTERS
Last Updated: Fri, Nov 02, 2012 12:17 hrs
An employee counts Indian currency notes at a cash counter inside a bank in Kolkata

The rupee snapped a three-day winning streak after hitting a one-week high early in the session on Friday as sharp losses in the euro prompted banks to cover their short dollar positions heading into the weekend.

The euro fell to a three-week low against the greenback, pushing the dollar index to a seven-week high, with traders citing option-related selling of the euro by macro investors.

"The market is getting thinner and moves have been usually tracking the flows. In the morning there were moves tracking flows, but later we started tracking the euro," said Paresh Nayar, head of fixed income and forex at First Rand Bank.

Nayar added, "54.20 seems like a good resistance for the USD/INR and if that holds, 53.20 can be seen".

The partially convertible rupee closed at 53.8050/8150 per dollar versus its previous close of 53.6950/7150. It had hit 53.61 earlier in the session, its strongest since October 25.

The rupee lost 0.2 percent on the day, taking its fall to 0.5 percent on the week.

Traders said a further fall in the rupee was averted by gains in the local share market. Foreign fund inflows into the domestic share market are a key determinant of the rupee's fortunes.

Shares ended up 1 percent, helped by select buying in recent underperformers such as ITC Ltd and Larsen and Toubro as the global risk environment improved on the back of better-than-expected U.S. economic data.

Foreign funds have bought more than $18 billion of shares so far in 2012.

"Markets are uncertain about the winter session of Parliament, US election results and Greece. I see a higher probability of USD/INR moving towards 53.00/52.50 compared to 55.00," said Samir Lodha, managing director at QuantArt Market Solutions.

"I see the government being committed to ensuring capital inflows and that should help the rupee."

In the non-deliverable forwards market, the one-month contract was at 54.14 while the three-month was at 54.70.

In the currency futures segment, 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 54.0850, with a total traded volume of $3.56 billion.


blog comments powered by Disqus
most popular on facebook
talking point on sify finance