Defying positive sentiments in the stock market, the rupee on Friday snapped a three-day winning trend to close 11 paise down at 53.81 against the dollar amid fresh demand of the US currency from importers.
At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced stable at its overnight closing level of 53.70 and immediately touched a high of 53.60 on firm local stocks amid some dollar selling by exporters.
The dollar index, a gauge of six major global rivals, was up by 0.35% as traders laid bets ahead of the release of crucial October non-farm US payrolls data, experts said.
This led to a demand from importers as businesses wanted to lock the US currency at cheaper rates in anticipation of sharper rise in coming days, they added.
This sudden dollar demand from importers and strong dollar overseas weighed on the rupee and it fell back to a low of 53.82. FII inflows worth $70 in stocks helped cushion the currency’s fall partially. The rupee concluded marginally better at 53.81 ? a fall of 11 paise or 0.21%. It had risen by 38 paise since Tuesday.
The rupee’s fall comes on a day the Indian stock market benchmark Sensex closed higher by 193.75 points. The rupee could not hold on to its gains on Friday on account of positive stock markets and we expect the rupee to be in the range of 53.50-54.25 for the next few days, said Abhishek Goenka, Founder & CEO, India Forex Advisors.
“Rupee continued to trade in a tad range with weakening bias. Euro remained on a weak note after the zone’s October manufacturing numbers witnessed contraction…the dollar index edged higher due to risk aversion after European stocks declined,” Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said.
Bond yields gain 7 bps
Mumbai, Nov 2: Benchmark 10-year bonds ended little changed on Friday, but gained 7 basis points for the week as investors pushed back expectations for rate cuts until 2013 after the central bank kept interest rates on hold on Monday.
Bond yields are expected to remain range-bound at current levels, with potential for falls if the RBI announces bond purchases via open market operations or if the government announces new fiscal reform measures.
Bond prices were hit hard this week after RBI delivered only a cut in the cash reserve ratio, or the amount of deposits lenders must keep with the central bank, although OMOs are still expected, later in 2012.
The market is still awaiting more on the fiscal reform initiatives and implementation cues to take a call on yield curve, said Shakti Satapathy, a fixed income strategist with AK Capital. The benchmark 10-year bond yield rose 1 basis point to 8.2% on Friday, after trading in a 8.19 to 8.21% range during the day.
However, the 10-year bond yield rose 7 basis points after hitting a weekly high at 8.22% at one point on Thursday. The total volume on the central bank’s trading platform was a moderate 149.40 billion rupees ($2.78 billion), lower than the average volumes of R28,000 before the RBI decision. With little expected on the domestic data front next week, the yield is expected to move in range of 8.15% to 8.23%, traders said.
