Indian rupee erases 3-day gaining streak against US dollar

Updated: Feb 14 2014, 04:20am hrs
RupeeThe weakness in the emerging market currencies also helped the Indian rupee to weaken against the US dollar.
Today Indian rupee erased all of the gains of the last three days as concerted selling in equity and debt markets caused US dollar to strengthen. Rupee depreciated 34/35 paise towards 62.42/43 on spot against the US dollar. Orders from foreign banks on behalf of their FIIs clients along with bids from a couple of PSU corporates triggered the sharp rally in the US dollar. The weakness in the emerging market currencies also helped the Indian rupee to weaken against the US dollar.

Over the near-term, we continue re-iterate that it is advisable for importers and corporates who have uncovered FCY loan repayments, to consider cost-effective hedging structures before the binary risk of elections comes due in April/May. As a result, a range of 61.50/80 and 62.60/62.80 can be seen. In case, of a substantial increase in risk aversion in domestic equity markets, the range can expand towards 63.30/50 on the upside.

By Anindya Banerjee, analyst, Kotak Securities