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Rediff News  All News  » Business » Rupee snaps five days of gain; ends at 63.5

Rupee snaps five days of gain; ends at 63.5

Last updated on: September 12, 2013 17:43 IST

Rupee graphicThe rupee fell on Thursday, ending five days of gains, as state-run banks likely bought dollars to meet defence needs of the government and as investors booked profit in shares.

Dealers cited RBI intervention to support the rupee as it approached 64 to the dollar.

The rupee has been on a recovery trail helped by recent steps like the passage of the pension bill in parliament and the central bank providing a concessional swap facility to banks to attract overseas deposits from non-resident Indians, which by some estimates can net around $10 billion, helping ease some of the recent despondency about policy making in India.

Foreign buying in Indian equities has continued to remain strong, now adding up to nearly $900 million in five sessions, including provisional data for Wednesday.

Analysts, however, are cautious to already call a turn in fortunes for the rupee.

"We'd be hesitant to say that this denotes a serious sentiment shift for India, and more likely an opportunistic short-term dynamic reflecting buying at (short term)

technically oversold levels in EM equities," said Sacha Tihanyi, senior currency strategist at Scotiabank.

The rupee ended at 63.50/51 to the dollar versus 63.38/39 last close. It rose to 62.92 in the session, its strongest level since August 19.

After favourable trade data, that showed the trade deficit narrowed most in five months, economists awaiting July factory and August retail inflation data later on Thursday to provide cues ahead of the central bank's policy meeting next week. Wholesale inflation data is due on Monday.

India's factory output likely shrank for the third straight month in July, while wholesale inflation likely edged up to a six-month high in August.

In the offshore non-deliverable forwards, the one-month contract was at 64.29 while the three-month was at 65.56.

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 around 63.94 with a total traded volume of $3.4 billion.

Subhadip Sircar in Mumbai
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