Rupee snaps 2-week gaining streak; closes at 54.33 Vs dollar
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Rupee snaps 2-week gaining streak; closes at 54.33 Vs dollar

Last Updated: Saturday, March 23, 2013, 15:54
 
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Rupee snaps 2-week gaining streak; closes at 54.33 Vs dollar
Mumbai: Breaking its two-week of gaining streak, the rupee reacted downwards from nearly 3-week intra-day high of 53.90 and closed 32 paise down at 54.33 against the Greenback during the week under review following distinctly weak local equities amid fresh dollar demand from importers and some banks.

Dovish statement by the RBI over the future cut in the key interest rates following higher inflation and political mess after the DMK withdrew the support of the Congress-led UPA government at the Centre over the issue of alleged human rights violations of Tamils in Sri Lanka also disappointed the market, a forex dealer said.

Continued capital inflows and weak USD overseas after the mid-week failed to stem the fall in the rupee, he added.

At the Interbank Foreign Exchange (Forex) market, the domestic unit resumed the week lower at 54.28 a dollar from preceding weekend's close of 54.01, but recovered later on Tuesday in early morning to a high of 53.90 on hopes of key rates cut by the RBI, level not seen since February 28, 2013 when it had logged an intra-day high of 53.60.

However, despite the short-term lending and borrowing (repo and reverse repo) rates cut by 0.25 percent by the apex bank, the rupee fell back on dovish statement by the RBI that there is limited scope for the rate cut in immediate near future due to rising inflation and higher current account deficit (CAD).

The rupee then touched a low of 54.56 before recovering some ground to settle the week at 54.33, displaying a fall of 32 paise, or 0.59 percent. In last two week, it had appreciated by 88 paise, or 1.60 percent.

The BSE benchmark Sensex closed the week down by almost a massive 692 points, or 3.56 percent, registering its biggest fall in the current calender year and also since second week of December 2011.

FIIs, however, injected USD 171.97 million in equities in the first four days of the week, as per Sebi data.

Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said: "This week the rupee traded three-week high on Tuesday before a disappointing central bank policy statement.

"On Tuesday, the key ally DMK withdrew support from the ruling coalition government was reflected in the weak local equities, which fell for a fifth session to their lowest close in nearly four months, which also weighed on the rupee. It traded strong at mid-week when the news was out largely helped by inflows related to a share sale and debt limit auction to foreigners."

"But looking at the global scenario the gains were not sustained. The short term Rupee looks weak and we could see 55 levels as domestic concerns are coming at a time when investors are also growing concerned about foreign flows after Cyprus issue.

"In addition to uncertainty about Cyprus, the euro was pressured by evidence that the eurozone's economic downturn worsened this month. French and German purchasing-managers' index, or PMI readings, dragged the region's composite PMI further into contraction territory," he added.

"The continued political gridlock and sluggish equities mainly put pressure on the rupee. Globally, the market still awaits the decision over Cyprus bailout. Any positive news could improve the sentiment for a while," said Abhishek Goenka, Founder and CEO, India Forex Advisors.

The rupee premium for the forward dollar ended mixed on alternate bouts of buying and selling.

The benchmark six-month forward dollar premium payable in August finished lower at 173-175 paise from last weekend's level of 175-1/2-177-1/2 paise, while far-forward contracts maturing in February ended up at 338-1/2-340-1/2 paise as against 336-338 paise.

The RBI fixed the reference rate for the US dollar at 54.3350 and for euro at 70.1005 as against the last weekend's level of 54.1605 and 70.5023.

The rupee dropped further against the pound sterling to 82.58 from preceding weekend's level of 81.81 and fell back sharply against the Japanese yen to settle at 57.36 per 100 yen from last weekend's level of 56.22.

However, it remained firm against the euro to end at 70.41 from previous weekend's close of 70.51.

PTI




First Published: Saturday, March 23, 2013, 15:50


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