Rupee drops for third day in a row; oil demand hurts

Rupee drops for third day in a row; oil demand hurts

close

Mumbai:

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 per cent 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, after the drug maker said on Wednesday it would offer $215 million for a majority stake in South Africa's Cipla Medpro.

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.

Copyright @ Thomson Reuters 2012

Story first published on: November 22, 2012 05:45 (IST)

MORE FROM NDTV

FROM THE WEB

MORE FROM THE WEB
MORE FROM NDTV

For Profit Update,
Follow NDTV on Pinterest

Social Sharing

Advertisement

Advertisement

Portfolio
 

More From NDTV

More From the WEB

Don't Miss

Advertisement

Market Data provided by © Accord Fintech.
© Copyright NDTV Convergence Limited 2014. All rights reserved.