| Date: |
07-06-2012 |
| Subject: |
India rupee gains; fails to breach 55-level |
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The rupee has gained for three consecutive sessions, bouncing back from a record low of 56.52 hit a week ago, though few analysts expect a sustained rebound ahead of key events this month including the Reserve Bank of India's policy meeting on June 18.
In the near-term, the rupee could strengthen to above 55 should flows from higher equity markets pick up, according to traders, though any positive impact would likely be offset by demand for dollars from oil companies.
Foreign investors turned net buyers of 2.7 billion rupees ($48.74 million) of stocks on Wednesday, according to provisional exchange data, though they remain net sellers of about 20 billion rupees so far this month, indicating they have sold into the rally in Indian stocks.
"If flows are not very strong it may be difficult to breach 55 today, as small supplies will be absorbed by oilers," said Hari Chandramgathan, a forex dealer with Federal Bank.
He added that volumes so far had been below average.
At 10:12 a.m., the partially convertible rupee was at 55.18/19 per dollar, after earlier hitting 55.05 its strongest since May 28 and above its close of 55.36/37 on Wednesday.
One senior dealer at a foreign bank said some lenders were cutting their short dollar positions, preventing further gains in the rupee.
Traders broadly expect a range of 54.90 to 55.40 for the day and will watch developments in the euro zone for direction.
The euro held firm against the dollar on Thursday, as hopes for stimulus measures from the Federal Reserve and talk of European leaders looking for solutions in Spain's banking crisis helped demand for risk.
"As of now stock flows are expected to continue, but we need to see how far the euro zone goes in sorting out the crisis, which is not easy," Chandramgathan said.
"So rupee weakness will continue after the initial pause. If flows are good, the rupee can gain to 54.60 or 53.80 in the coming weeks." ($1 = 55.40 Indian rupees) (Reporting by Swati Bhat; Editing by Rafael Nam)
Source : in.reuters.com
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