Rupee drops in thin volume, hits 53/dollar
The rupee fell on Tuesday in light volume, weighed down by slowing domestic growth and worries the euro zone's debt crisis could spill over into the global economy and put more pressure on riskier currencies.
Many markets players were on the sidelines after the RBI slashed trading limits in the forwards market last week to curb speculation after the currency had ploughed record lows, traders said.
At 10:28 a.m. (0458 GMT), the rupee was at 53.04/05 to the dollar near the day's low of 53.065. It had closed 0.3 per cent weaker on Monday at 52.88/90.
"The market is very quiet and illiquid after the Reserve Bank of India's moves last week," said a dealer with a foreign bank.
He said quotes between bids and ask widened to 0.06 rupee from a normal 0.01 rupee as speculation dried up. The currency should move between 52.70 and 53.20, he said, similar to the wide moves on Monday.
Last Thursday, the central bank reduced net overnight open position limit of banks to curb excessive volatility and shore up the rupee, which had hit an all-time low of 54.30.
Volume has dropped sharply after the central bank's move from a normal $2 billion to $3 billion a day, traders said.
The offshore non-deliverable forwards (NDFs) indicated further weakness, with the one-month rupee NDFs at around 53.56.
The one-month onshore forward dollar premium were at 38.25 points, up from 37.5 on Monday, while the three-month premium was at 100.5 from 98. The one-year premium was at 276.25 from 267.25.
In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX, and the United Stock Exchange were all around 53.14. Total volume was at $817 million.
The main 30-share BSE index was down 0.3 per cent on a gloomy growth outlook and rising foreign fund outflows.
Lingering fears of regional instability after the death of North Korea leader Kim Jong-il on Saturday prompted investors to keep away from riskier assets like the euro and equities.
Post new comment