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Rediff.com  » Business » Rupee snaps two days of gains; closes at 62.52

Rupee snaps two days of gains; closes at 62.52

Last updated on: September 27, 2013 18:01 IST

Rupee snaps two days of gains; closes at 62.52

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Subhadip Sircar in Mumbai

The rupee fell on Friday, snapping two sessions of gains, as foreign banks bought dollars for their custodial clients, with the June-quarter current account deficit numbers due on Monday expected to provide direction to the currency.

The current account deficit, which hit a record high in the last fiscal year, is expected to be around $23 billion-$25 billion or 4.8-5.4 per cent of gross domestic product in April-June, from $18.1 billion, or 3.6 percent, in the March quarter, a Reuters poll showed.

The budget deficit and current account gap have been cited as the main reasons behind the rupee getting battered since late May when the US Federal Reserve first signalled its intention to taper monetary stimulus.

However, a series of steps taken by the central bank to curb the deficit and the Fed's decision to continue its stimulus for now has reduced worries about the funding of the current account gap, which the government hopes to contain within $70 billion in the current fiscal year.

"The CAD numbers should be worse than last time's figure of $18 billion as in the fiscal first quarter oil and gold imports have been higher and exports have been lower," said Anil Kumar Bhansali, vice president at Mecklai Financial.

"The rupee looks to me to be in a range of 61 to 64 to the dollar," he said.

The partially convertible rupee closed at 62.51/52 per dollar compared with 62.07/08 on Thursday.

It moved in a range of 61.765 to 62.56 during the session.

Rupee graphic"Emerging Asian currencies remained weak as US House of Representatives Republicans on Thursday refused to give in to President Barack Obama's demand for straightforward bills to run the government beyond September 30 and to increase borrowing authority to avoid a default.

The rupee has gained some semblance of stability after falling as much as 20 percent to 68.85 to the dollar in late August.

The currency ended the week with modest losses of 0.5 percent, after three weeks of gains.

A Reuters poll on Thursday showed the sentiment turned almost neutral for the rupee as capital inflows supported the currency, although the central bank's unexpected rate hike on Friday limited its upside.

In the offshore non-deliverable forwards, the one-month contract was at 63.25 while the three-month was at 64.35.

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 63.14 with a total traded volume of $2.4 billion.


Photographs: Reuters

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