Rupee shrugs off initial setback to end almost flat Vs dollar

The rupee today fell to its lowest level in five weeks but recouped most of the losses to end almost flat at 62.41 against dollar ahead of European Central Bank's interest rate decision and third-quarter US GDP data.
After falling 77 paise to 62.39 against dollar on Tuesday, the rupee opened at 62.35 but fell to intra-day low of 62.73. This mirrored the uneasiness in the domestic stock market after S&P warned it could downgrade India if the next government fails to reverse the slide in GDP growth.
Mild dollar demand from banks and importers also weighed. on the rupee. However, it clawed its way back to end at 62.41, down just 2 paise or 0.03 per cent compared to yesterday, after the US currency held steady in the overseas markets.

"Any upside surprise to the US GDP numbers will result in gains in the dollar and hence will lead to weakness in all Asian currencies including Rupee. Technically, if the USD/INR sustains above 62.20 levels for next couple of sessions, then we can see 63 plus levels," said Abhishek Goenka, Founder & CEO, India Forex Advisors.
The European Central Bank's decision on interest rates is due at 12.45 GMT, amid speculation that a rate cut is in offing after falling Eurozone inflation data.
Soon after, investors would take cues about the economic health of US when third-quarter GDP data arrives.

The Bank of England also holds a policy meet on Thursday.

Globally, the Euro is trading steady ahead of the key ECB rate policy meeting with markets divided as to whether the central bank will cut its benchmark rate. Some analysts believe that markets are expected to remain unclear and would have to wait until tomorrow's US non-farm payrolls data.
This raft of data could influence US Fed's timing of paring its USD 85 billion-a-month bond purchases that has led to increase in FII inflows into emerging markets like India.
Meanwhile, after rising 248 points in early trade, the Sensex today surrendered all gains to close 72 points down at a fresh 1-week low on heavy selling after the S&P warning.