The Indian rupee fell to over two-month lows on Friday, marking a fourth straight weekly loss for the currency and its longest losing streak in nearly six months, weighed down by persistent dollar buying by oil companies. However, the central bank is believed to have sold dollars via state-run banks around 55.50 levels, putting brakes to a steeper fall in the currency.
Although the Reserve Bank of India has been speculated to have acted before, Friday's session marked the first clear signal of dollar sales since mid-October, dealers said. "With month-end dollar demand still going through, the pressure is on the rupee to weaken. However, the market will be cautious of intervention from the central bank," said Vikas Babu Chittiprolu, a senior foreign exchange dealer with state-run Andhra Bank.
The partially convertible rupee closed at 55.5350/5450 per dollar versus its previous close of 55.21/22. The unit dropped 0.6 percent on day, taking its fall to 0.7 percent on the week. The rupee fell to 55.53 during the day, its weakest since September 11.
In the offshore non-deliverable forwards market, the one-month contract was at 55.81 while the three-month was at 56.40. Westpac says 1-month USD/INR NDF could push above the 56 level in coming weeks as fundamentals still suggest a near-term turnaround is unlikely, even as valuations on a NEER basis are cheap compared with the rest of Asia. 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 closed at around 55.58 with a total traded volume of around $5.3 billion.
Comments
Comments are closed.