RUPEE: REVERSES INITIAL GAINS
DATE: 16/07/2012
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The Indian rupee
extended weekend rally on Monday, July 16, 2012 alongside most risk sensitive
assets as fears of an economic hard landing in China subsided, with Premier
Wen Jiabao raising the prospect of more policy stimulus if needed. The
domestic currency opened stronger by 32 paise at R 54.92 to a dollar and
climbed further to a high of 54.77 so far during the day. Local shares
commenced in the positive but is seen moving into the lower terrain that is
likely to weigh on the domestic currency unit. In the spot currency market,
the Indian unit however retreated early gains and was last seen trading at
54.89, higher by around 27 paise or 0.48% as compared to previous close at
55.15.
Domestic benchmark indices cut initial gains triggered by mostly higher Asian stocks. Most Asian stocks rose on Monday, after US shares ended with solid gains on Friday, on the back of better-than-expected quarterly results from J.P. Morgan Chase & Co. and Wells Fargo & Co. Meanwhile, foreign institutional investors (FIIs) are buying Indian stocks this month. FIIs bought shares worth a net R 281.13 crore on Friday, 13 July 2012, as per provisional data released by the stock exchanges. At the time of writing, the BSE Sensex was down 8 points or 0.04% to 17,205.99 while the S&P CNX Nifty was up 1.25 points or 0.02% to 5228.50. The euro and high-beta currencies rallied on Monday, following a rally late last week in part on the back of diminishing worries about China's economic health. The euro held firm, trading at $1.2250 early in Asia today versus $1.2241 late on Friday in New York, pulling further away from a two-year trough around $1.2162 plumbed last week. The single common currency is currently quoting at 1.2236 versus the greenback. In the domestic currency futures market on the NSE, the forward month July contract opened on Monday, July 16, 2012 at 55.00, higher than the spot market rupee. The contract hit an intraday high at 55.06 and registered a low at around 54.88 so far during the day. At the time of writing, the NSE July 2012 USD/INR contract was trading at around 54.97, down by around 29 paise or 0.53% as compared to previous close at 55.26.
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