Rupee Falls Third Day In A Row On Strong Dollar Demand
November 23, 2012 1:11 AM EST
The rupee weakened for a third straight session on Thursday as persistent dollar buying by oil refiners and absence of major dollar inflows due to a holiday in the United States hurt the local unit.
Traders are also growing wary of India's fiscal stance after a government source said fiscal deficit could reach 5.5 to 5.6 percent of its GDP in the financial year to end March, which could require additional market borrowing of 350-400 billion rupees.
"Personally, I continue to run moderately short USD positions even at this stage. I do not agree to the consensus of 56-57 levels on the pair and think the rupee can appreciate hereon with a second round of capital inflows," said Samir Lodha, managing director at QuantArt Market Solutions.
The partially convertible rupee closed at 55.21/22 per dollar versus its previous close of 55.11/12.
Traders estimated about $200 million worth of dollar demand, which they attributed to Cipla (CIPL.NS), after the drug maker said on Wednesday it would offer $215 million for a majority stake in South Africa's Cipla Medpro (CMPJ.J).
The absence of major flows due to the Thanksgiving holiday in the United States also weighted on the rupee.
Dealers expect the pair to move in a 54.50 to 55.50 range in the immediate future, pending developments at the winter session of parliament which started on Thursday.
"The winter session will be key. The rally seen in the rupee post the reforms announcement was short-lived, but even a small negative is hurting the rupee," a senior dealer with a state-run bank said. The dealer predicted the rupee to remain in a 54.80 to 56 range, and head above 56 by year-end.
In the offshore non-deliverable forwards market, one-month contract was at 55.51, while the three-month was at 56.09.
In the currency futures market, 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 55.25 with a total traded volume of $4.3 billion.
Most Popular Slideshows
- Kristen Stewart Moving On With Nicholas Hoult, Jennifer Lawrence Dating Chris Martin – Reports [PHOTOS]
- Kate Middleton Suffocated in Kensington Palace, Queen Elizabeth Reported War With The Duchess [PHOTOS]
- Chris Martin Dating Reports: Jennifer Lawrence Vs Gwyneth Paltrow [PHOTOS]
- 9/11 Dust Cloud Most Likely Have Created Pregnancy Issues: Celebrities Who Posed Nude During Pregnancy
Join the Conversation
- Saudi Arabia: Brothers Beheaded For Smuggling Marijuana Into The Kingdom
- ISIS: More Journalists Beheading To Come After James Foley and Steven Sotloff [Video]
- Moto X+1 is Likely Nexus 6 Template; Motorola Shamu is 1st Android Silver with Snapdragon 810 – Reports
- James Foley’s Executioner Has British Accent—A Chilling Reminder That ISIS Has Foreign Members
- ISIS Posts Graphic Beheading Video of US Journalist James Foley
- iPhone 6 Release Date Remains On Course for Sept-Oct 2014 as Apple Delays iWatch Debut to 2015
- Nexus 6 Release Date Dilemma with Motorola Shamu Details Pointing to Better Smartphone and Killer Features