Rupee recovers after hitting 1-wk low

Written by Reuters | Updated: Jun 26 2014, 07:39am hrs
The rupee hit a one-week low on Wednesday, weighed down by losses in other Asian currencies and shares but good dollar inflows for a share sale helped the unit recover to end marginally higher on the day.

Reliance Communications on Wednesday raised $804 million by selling shares, people involved in the process said, in what is the single biggest equity issue since the Narendra Modi government took office.

Dealers said the central bank has been persistently spotted buying dollars in the market to prevent dollar inflows from pushing the rupee sharply higher.

Foreign funds have bought shares worth $2.3 billion and debt worth $2.98 billion so far in June, taking total inflows in the year to $9.9 billion and $10.6 billion in each of the two segments.

Most emerging Asian currencies eased on expectations of higher dollar demand for oil imports given worries that the intensifying Iraq crisis will disrupt crude supplies from the world's second-largest OPEC producer.

Traders expect the market to be range-bound until the Budget on July 11.

The rupee closed at 60.1325 per dollar on Wednesday. It dropped to as much as 60.3850 during the session, its lowest since June 18.

Bonds end up for second session

Government bonds rose for a second straight day on Wednesday, tracking fall in global crude oil prices and continued short-covering by traders after recent losses.

Brent crude oil slipped below $114 a barrel on Wednesday as fears of supply disruption in Iraq receded and after a rise in US inventories pointed to ample stockpiles for the world's biggest oil consumer. However, investors held off large positions due to persisting uncertainty ahead of the Budget on July 11. The benchmark 10-year bond yield ended down 2 basis points on the day at 8.70%.