Rupee pares early gains on weak IIP data but ends 15 paise up
Mumbai: The rupee on Thursday pared some gains on weak June IIP data but managed to end 15 paise higher at 55.27 against the US dollar on sustained capital inflows.
The rupee commenced remarkably higher at 55.18 a dollar at the Interbank Foreign Exchange (Forex) market from 55.42 previously and touched a high of 55.04 on early rise in domestic stocks and heavy capital inflows.
However, late weakness in stocks induced by a 1.8 percent unexpected drop June industrial production and dollar demand from importers put pressure on rupee as it pared gains.
The local currency fell back to a low of 55.39, before recovering slightly to close at 55.27. This was still a rise of 0.27 percent or 15 paise compared to Wednesday's close.
Forex dealers said dollar selling by exporters amid a firm American currency in overseas market hit the rupee sentiment but over Rs 330 crore pumped in by FIIs in stocks provided support.
They added that with Moody's research arm today scaling down its forecast for the country's economic growth this fiscal to 5.5 percent, the outlook for rupee becomes cloudy.
"Rupee opened on a higher note and was trading in a 5-10 paisa range for while. But, weakness in Euro and low IIP data weakened the domestic currency," said Hemal Doshi, Currency Strategist, Geojit Comtrade.
The dollar index, a gauge of six global major rivals, was up by 0.31 percent as weak data from the Eurozone deepened fears.
"The IIP for the month of June came at (-1.8 percent) against the expectation of 1 pc, which was seen drifting the rupee towards 55.30 plus levels. Euro was also seen coming down to 1.23 levels," said Abhishek Goenka, Founder & CEO, India Forex Advisors.
Meanwhile, the Indian stock market benchmark Sensex, which was up by over 100 points in the morning, ended down by about 40 points.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said: "The rupee reversed part of its early gains after the equity markets gave up the advances and ended lower. A weaker than expected IIP numbers which contracted by 1.8 pc in June along with downward revision of GDP numbers by Moody later weighed on the currency".
The dollar index edged higher after the lacklustre performance by the Euro which was unable to climb above the 1.2450 as the ECB effect faded, he added.
The premium for the forward dollar fell back slightly on fresh receiving by exporters.
The benchmark six-month forward dollar premium payable in January moved down to 175-176-1/2 paise from overnight close of 177-179 paise.
The premium for far-forward contracts maturing in July also softened to 320-322 paise from 321-323 paise.
The RBI fixed the reference rate for the US dollar at 55.1715 and for euro at 68.2690.
The rupee recovered against the pound sterling to 86.38 from Wednesday's close of 86.82 and also bounced back against the euro to 67.98 from 68.53.
It too recouped against the Japanese yen to 70.58 per 100 yen from last close of 70.76.