Forex dealers said besides a lower opening in the domestic equity market on fears of a rate hike by the Reserve Bank, higher demand for the American currency from importers put pressure on the rupee but dollar's weakness against other currencies overseas, capped the fall.
.jpg)
RBI chief Raghuram Rajan said on Thursday he was 'very uncomfortable' with the inflation reading, a comment that probably seals the case for him to deliver his third rate increase next Wednesday, despite a weak economy.
The country's merchandise deficit narrowed to $9.2 billion in November, but exports growth eased to 5.9 percent from 13.5 percent in October, government data showed.
The rupee resumed higher at 61.75 as against the last closing level of 62.05 per dollar at the Interbank Foreign Exchange (Forex) Market and firmed up further to a one-month high of 61.53 before quoting at 61.59 per dollar at 1045 hours.
.JPG)
The gains in the rupee masked a rising sense of caution across markets ahead of the results of elections in several states. Delhi was the latest to hold assembly elections on Wednesday.
The deficit data was the latest in a run of positive signs for the sluggish domestic economy and could put India in a better position should the Fed start tapering, than in the summer when the rupee hit a record low.
.jpg)
The rupee was last at 62.05/06 after gaining to as high 61.9650 against the dollar, its highest since Nov 19. It had closed at 62.44/45 on Friday.
However, dealers said that most of the rupee's gains were lost on consistent dollar demand from state-run oil refiners and other importers.
The gains will provide a much-needed reprieve after the rupee fell for a fifth week and hit an over two-month low last week in trade.
Reserve Bank of India Governor Raghuram Rajan, in a hurriedly called press conference, said that the central bank has now routed back most of the dollar demand from oil companies to the market.
The rupee was also pressured as the euro fell for a second day on Friday, hurt by the European Central Bank's surprise interest rate cut and a downgrade to France's credit rating, while the dollar inched up before a key US jobs report.
S&P is the only of the three major credit agencies with a 'negative' outlook on India.
.jpg)
In the global market, the dollar was quoted lower in the early trade with investors looking ahead to the following day's European Central Bank policy decision.
Forex dealers said besides dollar gaining against other currencies in the global markets, increased demand for the American currency from importers and lower opening in the domestic equity market influenced the rupee.
The Indian currency resumed lower at 61.50 per dollar as against the last closing level of 61.46 at the Interbank Foreign Exchange Market.
Dealers attributed the fall in rupee to gains made by US dollar against the euro and other overseas currencies ahead of US jobs data and a lower opening in the domestic equity market.
Global currency market sentiment is likely to be driven by the US deficit and debt ceiling negotiations, with markets likely to turn more risk averse closer to October 17, the date by which the US Congress must approve raising the country's borrowing limit.
The improvement in the current account deficit is expected to provide a major reprieve to the government and the Reserve Bank of India which have been battling to prop up the rupee.
The RBI recently met with a handful of foreign banks and asked them to stop acting as market-makers for rupee NDFs, according to three bankers involved in the discussions.
The RBI's comments, announced after trading hours on Wednesday, comes as yields had risen by 60 basis points after a surprise hike in the repo rate on Friday and on worries about the fiscal second borrowing programme of the government.
© 2025 Rediff.com - Investor Information - Advertise with us - Disclaimer - Privacy Policy - Sitemap - Feedback - About us - Terms of use - Grievances