Rupee fails to maintain last week gains; closes at 7-week low
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Rupee fails to maintain last week gains; closes at 7-week low

Last Updated: Saturday, March 02, 2013, 17:24
 
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Rupee fails to maintain  last week gains; closes at 7-week low
Mumbai: The Indian rupee failed to maintain last week's gain, tumbling by 72 paise to finish the week at over 7-week low of 54.89 against the Greenback on month-end heavy dollar demand from importers and some banks amid sluggish local equities due to announcement of disappointing Union Budget.

Strong dollar overseas following weakness in euro after reports showed manufacturing gauge based on a survey of purchasing managers contracted in February. The dollar index was quoting higher against a basket of six major currencies as investors preffered to invest in safer assets.

Fresh sell-off by foreign funds over the announcement of Tax Residency Certifacte (TRC) by the Finance Minister in his budget speech on Thursday created fears in the foreign investors mind, also weighed on the rupee.

At the Interbank Foreign Exchange (Forex) market, the domestic unit resumed lower at 54.22 a dollar and hovered in a wide range of 53.60 per dollar and 54.94 per dollar before finishing the week at 54.89 per dollar, showing a net loss of 72 paise of 1.33 percent.

Previously, it had finished at 54.98 on January 8, 2013.

The Indian benchmark S&P Sensex dropped by 398 points or 2.06 percent to 18,918.52.

"The rupee fell below its more-than one-and-a-half month low against the US dollar in view of disappointing budget. International factors like weak euro and strong dollar index also pointed towards the rupee fall. As mentioned earlier, rupee moves closer to the target of 55.00 levels," said Mr. Abhishek Goenka. Founder and CEO, India Forex Advisors.

"Government proposing about Rs 17,000 crore higher net borrowing target in the Budget, which was more than street expectations, hit market sentiment to a great extent. This in turn hit the rupee. Especially, banks stocks were badly hit on concerns of tighter liquidity situation," said Mohan Shenoy, Head (Treasury) at Kotak Mahindra Bank.

In a research note, Managing Director and Chief India Economist Tushar Poddar said: "With risks to the net borrowing requirement from the Budget to the upside, and no major proposals in the budget to reduce the current account deficit (CAD), we think there are depreciation pressures for the INR in the near-term."

Foreign Institutional Investors (FIIs) slowed down their buying spree by investing just Rs 543.99 cr during the week including the provisional figure of Feb 28.

The premium for the forward dollar finished lower on receipts by exporters.

The benchmark six-month forward dollar premium payable in July closed lower at 164-166 paise from 171-1/2-172-1/2 paise last week and far-forward contracts maturing in January too settled lower at 332-334 paise as against 337-338-1/2 paise.

The RBI fixed the reference rate for the US dollar at 54.4815 and for euro at 71.2736 as against the last weekend's level of 54.4270 and 71.9061.

The rupee firmed up against the pound sterling to 82.50 from last week's close of 82.67.

However, it dropped against the euro to 71.55 from last close of 71.35 and also closed weak against the Japanese yen to end at 59.09 per 100 yen from 58.13.

PTI



First Published: Saturday, March 02, 2013, 17:23


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