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Indian rupee hits three-week low; 'fiscal cliff' progess eyed

SAMAA | - Posted: Dec 21, 2012 | Last Updated: 7 years ago
Posted: Dec 21, 2012 | Last Updated: 7 years ago
Indian rupee hits three-week low; 'fiscal cliff' progess eyed

MUMBAI: The rupee hit a three-week low on Friday, extending its fall for a third straight week, as uncertainty over the U.S. “fiscal cliff” resolution dented demand for risk assets including domestic equities.Traders said month- and year-end dollar demand from oil and gold importers also added to the downward pressure on the local currency. Oil firms bought the greenback aggressively this week while gold importers purchased the U.S. unit to take advantage of relatively lower global gold prices.”INR has been choppy and I expect it to remain so in the last week as well. The U.S. fiscal agreement will be important for the market,” said Paresh Nayar, head of fixed income and forex trading at First Rand Bank.”54.10 is showing good support while 55.45 is the first technical resistance. I expect the pair to hold in that broad range next week,” Nayar added.The partially convertible rupee closed at 55.06/07 per dollar versus its previous close of 54.8450/8550. The unit fell to a low of 55.2550, its weakest since November 29.On the week, the rupee shed 1 percent of its value, marking its third consecutive weekly fall.Traders said dollar sales by exporters around the 55.20 to 55.25 levels helped the rupee recover some of its losses from the day's lows but the weakness in shares hurt.The Sensex ended lower, marking a second week of declines, as lenders were hit by profit-taking, while Bharti Airtel fell after federal police filed charges as part of a probe into alleged corruption in allocation of mobile airwaves.Sentiment for the rupee has also been dented by a status quo at the central bank's policy review earlier this week. The RBI kept interest rates on hold on Tuesday, ignoring government pressure to reduce borrowing costs, but said it was shifting its focus towards boosting a flagging economy, raising the odds of a rate cut as early as January.Global stock markets weakened on Friday and both the euro and gold slipped, as a new setback in talks to avert a U.S. fiscal crisis and evidence of Europe's ongoing economic difficulties stoked investor nerves.In the offshore non-deliverable forward market, the one-month contract was at 55.43 while the three-month was at 55.95.In the currency futures market, the most-traded near-term dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange closed at around 55.1975 with a total traded volume of $5.38 billion. AGENCIES

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