Re falls, snaps three sessions of gains

The rupee strengthened for the third straight day and hit a one-month high on Thursday on expectations the Congress-led UPA govt will win the voting session on retail FDI

The three sessions of gains came to an end on Friday, when the rupee fell due to the euro’s weakness. The rupee closed at Rs 54.48 per dollar compared with previous close of Rs 54.14.

On Friday Germany’s central bank the Bundesbank cut the gross domestic production (GDP) forecast of Germany for next year dampening demand for the 17-nation shared currency euro. The rupee opened at Rs 54.25 per dollar and traded in the range of Rs 54.11-54.56 during the day.

“Demand for dollar by oil importers had also put pressure on the rupee,” said Sandeep Gonsalves, forex consultant and dealer, Mecklai & Mecklai.

The rupee strengthened for the third straight day and hit a one-month high on Thursday on expectations that the Congress-led UPA government will win the voting session on foreign direct investment (FDI) in multi-brand retail in the Rajya Sabha on Friday.

The government won the Rajya Sabha vote on FDI in retail. But according to dealers the market had already factored in the winning.

Ashutosh Khajuria, president (treasury), Federal Bank is of the view that by end-December the rupee may weaken to Rs 55 per dollar due to concerns on widening Current Account Deficit and trade deficit. However, according to Khajuria if the Reserve Bank of India announces any move to boost capital inflows, then the rupee movement will be reversed.