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
- Flight MH17 Attack: Russians Claim 'Putin A Terrorist,' Memorial at Dutch Embassy Overflows [PHOTOS]
- Typhoon Rammasun Claims 18 Lives in China, Incurs $4.32B Losses (PHOTOS)
- Ellen DeGeneres Caught Cheating with Mutual Friend Before Portia de Rossi’s Rehab – Reports [PHOTOS]
- Malaysia Airlines MH17: Vital Black Boxes Finally Land in Hands of Malaysian Authorities, Rebels Announce Ceasefire (PHOTOS/VIDEOS)
Join the Conversation
- Australian Stock Market Report – Midday July 23, 2014
- Major European & U.S. Airlines Cancel Flights to Israel after Rocket Attack on Tel Aviv Airport
- Alibaba Okays Yahoo Request to Sell 140 Million Shares Via IPO, 68 Million to Be Sold to Shareholders
- Australian Stock Market Report – Afternoon July 23, 2014
- BHP Billiton Goads Abbott Government to Also Repeal Mining Tax Law
- Samsung Galaxy Note 4 Apps Leak Online, Five Fresh Features to Expect from the Android Smartphone
- Moto 360 Price Speculations, Key Features, Strategic Release Date, Design: A Watch That is More Than Just Time
- Windows Phone 8.1 Update Rollout: 20 Nokia Lumia Phones Eligible and 13 New Features to be Added
- Google Nexus 8 Release Date Soon Along with 2 More HTC Android Tablets – Reports
- Three New Moto G Successors Spotted in FCC Document Dubbed Moto G2, Moto M and More --Reports
- iPad Air 2 Release Date Will Skip IGZO Panel; To Rollout with Super-Slim iPad Mini Air
- Upcoming iPad Mini 3 Could be 30% Thinner and Likely be Called iPad Mini Air; Apple Q3 Results Show 9% Decrease in iPad Sales