Indian rupee slips

The Indian rupee started 2010 on a weak note on the back of the dollar's rise versus major currencies, with trading muted on Friday as major markets were shut for the New Year. The partially convertible rupee was at 46.60/61 per dollar, weaker than 46.53/54 at close on Thursday.
"The dollar-rupee opened with a gap tracking overnight dollar gains, but it's just steady since then. The volumes are non existent," said a senior trader with a private bank. With Asian markets and the local stock market shut, trading is expected to remain quiet through the day. The dollar rose to its highest level in more than three months against the yen on Thursday after data showed US jobless claims fell to their lowest since mid-2008, affirming optimism about the economy.
One-month offshore non-deliverable forward contracts traded in Singapore were quoted at 46.585/625, close to the onshore spot rate, in very thin trade. "The near term outlook is for consolidation mode within 46.50-47.00. The 12 month forward dollar value is finding good resistance at 48.25-48.50 to limit rupee weakness beyond 46.90-47," said J. Moses Harding, head of global markets at IndusInd Bank.
"However, stable stock market and strong dollar would limit rupee gains beyond 46.50. Given the current trend of dollar struggling against the rupee despite its strength against major currencies, the bias would be for test/break of 46.50 for a move into 46.05-46.26," he added.
In 2009, foreign portfolio buying of more than $17 billion of domestic stocks helped the rupee rise 12.2 percent from a record low of 52.2 hit in early March. The rupee gained 4.7 percent last year.
Dealers said the only trigger that could move the rupee on Friday seemed to be dollar buying to meet any residual month-end demand by importers. Oil is India's biggest import and refiners are the largest buyers of dollars in the domestic currency market. Their demand tends to peak at the end of every month, when they are required to make payments for their imports. In the currency futures market, the most traded near-month contracts on the National Stock Exchange and MCX-SX were quoting at 46.68 and 46.6825 respectively, with the total traded volume on the two exchanges at about $105 million.