Rupee weakens for third day; seen range-bound in near term
By Swati Bhat
MUMBAI (Reuters) - The rupee weakened for a third straight session on Tuesday as the surprise rate hike by the Reserve Bank of India (RBI)last week tempered down the effect of the U.S. Federal Reserve's decision to not taper its monetary stimulus just yet.
The rupee has continued to weaken since the Reserve Bank of India's decision to hike rates on Friday, but intermittent selling by exporters and corporates has ensured the unit does not fall very sharply.
Traders will continue to monitor development's on the domestic and global front for further direction.
The Indonesian rupiah fell to its lowest level in four-and-a-half years, leading slides among emerging Asian currencies amid uncertainty over whether the U.S. Federal Reserve will begin scaling back its stimulus later this year.
"I think the current stability is only a temporary respite as sooner or later the taper tantrum will start again and India remains vulnerable with slow growth, high inflation and twin deficits," said Samir Lodha, managing director at QuantArt Market Solutions.
"It is a good opportunity for companies with dollar borrowings to hedge appropriately," he added.
The partially convertible rupee closed at 62.7525/7625 per dollar compared with 62.60/61 on Tuesday.
Some traders however said they expect the rupee to gain further from current levels.
"I am expecting the rupee to touch 61 levels by the end of September with RBI being the major factor. I expect some announcements from them along with heavy intervention which will push it there," a senior dealer with a state-run bank said.
Domestic shares ended a choppy session with mild gains reversing a two-day losing streak, on value buying in beaten down rate-sensitive shares, while the NSE index found support around its 200-day moving average.
In the offshore non-deliverable forwards, the one-month contract was at 63.65, while the three-month was at 64.68.
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 all closed at around 63.14 with a total traded volume of $2.68 billion.
(Editing by Anand Basu)
