Rupee snaps 2-week losing streak; closes at 54.17 Vs dollar
Mumbai: Snapping two-week of losing string, the Indian rupee recovered by five paise to end the shortened week at 54.17 against the American currency due to dollar selling by exporters and some banks on the back of persistent foreign capital inflows, despite weak local equities.
The forex market was closed on February 19 on account of "Chhatrapati Shivaji Maharaj Jayanti".
The rupee resumed bearish at 54.43 per dollar against the last weekend's close of 54.22 at the Interbank Foreign Exchange (Forex) market, but bounced back to a high of 54.03 on Wednesday, amid reports of low volumes due to the two-day bank union strike by public sector banks.
Dealers attributed rally in the rupee to dollar selling by exporters and some banks amid heavy foreign funds inflow in domestic equities.
However, it later dropped to a one-month low of 54.60 on Thursday on fresh dollar demand from importers and banks amid firm dollar overseas, before recovering smartly on the last day of the week to end at 54.17, showing a gain of five paise or 0.09 percent. In last two-week, it had dipped by 103 paise or 1.94 percent.
The Indian benchmark S&P Sensex continued its downslide for the fourth week in a row and closed lower by over 151 points or 0.78 percent while Foreign Institutional Investors (FIIs) invested USD 295.7 million on first four days of the last week, taking a total to over USD 8.37 billion in current calender year so far, as per Sebi data.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said,"after the much awaited crucial economic data which was released last week the current account deficit and the trade deficit after coming into the forefront the USD/INR, was being aggressively bought by the panic stricken importers and on last Friday it breached a crucial resistance level at 54.20 and closed the week above it."
"Moody's comments on the country's widening trade gap also took a toll on the rupee and it logged a low of 54.60 on the spot. On the other hand, the finance ministry has cut its market borrowing by Rs 12,000 crore sending out a strong signal that the fiscal deficit would be contained at 5.3 percent of GDP, as promised by finance minister P Chidambaram.
This should gratify credit rating agencies that have threatened India with a sovereign downgrade if steps are not taken to cut the fiscal and current account deficit," he added.
"All eyes are now glued on the Budget on 28th February, which should give the essential cues about our economy as to where it will head towards in this financial year. As per the remarks of the FM in the past few days regarding to contain fiscal deficit we may see some rally in markets and rupee.
"The crucial support for the pair remains protected at 54.10, meanwhile 54.65 should offer a stiff resistance to the currency pair. The pair seem to trade in a tight band within 53.80-54.60 till the budget sessions are through," he further commented.
Meanwhile, the Reserve Bank Of India (RBI) fixed the reference rate of US dollar as 54.4270 and Euro as 71.9061 as against the last weekend's level 53.9885 and 72.0865.
Turning to forward market, premium declined on some receipts by exporters. The premium for Spot/Jly declined to 171-1/2-172-1/2 paise from 173-1/2-175-1/2 while Spot/Jan eased to 337-338-1/2 paise from 337-339 previously.
The rupee moved up against the pound sterling to 82.67 from the last last weekend's level of 83.97 and firmed up against the euro to 71.35 from 72.25. It also strengthened against the Japanese yen to 58.13 (per 100 yen) from 58.50 previous week.