RUPEE: Slips To More Than Seven Week Low

Declining domestic shares and a strengthening US dollar overseas directed the Indian rupee to drop to more than a seven week low on Tuesday, 16 November. The Indian rupee opened slightly higher at Rs. 45.14 per dollar tracking gains in most of the Asian currencies against the US dollar but remained relatively range bound during early trades. Rupee hit an intra day high at 45.09 and touched the day's low at 45.33. The domestic currency has been extending its losses for the fourth straight session today as foreign investors are seen drifting away from riskier assets. Meanwhile, the US dollar is once again seen gaining as a safe haven asset and in turn dragging down the domestic currency. The Indian unit ended at 45.31, down almost 8 paise or 0.17% as compared to yesterday's close at 45.24.

The domestic share market slumped as stocks fell across the world on concerns over Ireland's debt and on fears of further monetary tightening in China. Worries that US funds will close positions in emerging market stocks ahead of the year-end to cash in on recent gains, also added to the decline. The barometer index BSE Sensex fell below the psychological 20,000 mark and the 50-unit S&P CNX Nifty fell below the psychological 6,000 mark. As per provisional figures, the key BSE Sensex ended at 19865.14, down 444.55 points as compared to previous closing.

The US dollar edged lower marginally to around 1.3618 after having hit an almost six week's high versus the euro during early Asian trades to around 1.3560 as 10-year U.S. Treasury yields jumped helping a broad lift to the greenback. The greenback however reversed back the slight intra day losses and is currently quoting at around 1.3580 levels against the European unit. The US dollar index, which tracks the greenback against a trade-weighted basket of six major currencies, was up 0.23% at 78.70.

In the domestic bond market, the yield on 10 year benchmark 7.80 GS 2020 federal paper ended at 8.07% almost flat as compared to the previous closing. Yield on federal paper 7.99 GS 2017 rose 1 bps to 7.98% as against 7.97% end of Monday. The yield on second most traded federal paper 8.13 GS 2022 was at around 8.06%, unchanged as compared to yesterday's close.

In the domestic currency futures market on the NSE, the front month November USD/INR contract opened on Tuesday at 45.34 per dollar mark. Rupee on NSE was trading weaker than the spot currency. The contract hit an intra day high at 45.44 and registered a low at around 45.20 during the day and ended at 45.43, down 0.23% as against previous close at 44.33. Meanwhile, euro- rupee contract ended at around 61.60, down by 0.15%, as against 61.69 registered in previous close. The JPY/INR contract was down at 54.49 by about 0.26% against 54.63 in the previous session. GBP/INR contract closed at 72.55, lower by 0.34% to as against 72.80 at close on Monday.

(source:indiainfoline.com)