Thursday, December 08, 2011

Rupee down on cautious Euro

The Indian rupee was weaker during the early hour on Thursday, 08 December 2011 as euro eased some of its overnight gains against the US dollar and negative start to the local equities further weighed down the Indian unit. The domestic currency opened lower by 4 paise at Rs. 51.75 to a dollar, registered a high of 51.70 and dropped to an intra day low of 51.91 so far during the day. In the spot currency market, the Indian unit was last seen trading at around 51.82, down almost 11 paise or 0.21% as compared to previous close at 51.71.
Euro eased some of its previous gains during early Asian hours on Thursday, over caution before the European Central Bank's rate decision later in the day and EU summit on Friday. If no concrete solution is reached tomorrow, it could trigger massive sell-off amongst risk correlated assets as fears will intensify that S&P could consider downgrading 15 Euro zone nations after having put them on “negative watch” early this week. After having rebounded to almost 1.3427 overnight, the euro is currently seen quoting at around 1.3405 against the US dollar.
Meanwhile, the US Dollar Index, which measures the performance of the U.S. unit against a basket of six currencies, is down 0.04%, at around 78. 46 levels. Among Asian currencies, the Taiwan dollar is down 0.07% at 30.18, the South Korean won lost 0.42% at 1130.70 while the Indonesian Rupiah fell 0.33% at 9067.50 as against the US dollar.
Key benchmark indices edged lower in early trade on weak regional stocks. Asian stocks dropped on Thursday ahead of a European summit on the region's sovereign debt crisis, and as economic data from Japan and Australia signaled the global economy is slowing. Foreign institutional investors (FIIs) bought Indian shares worth Rs. 135.36 crore on Wednesday, as per the provisional data from the stock exchanges. At the time of writing, India's key benchmark BSE Sensex lost around 175 points at around 16702 while S&P CNX Nifty is lower by almost 55 points at 5007.
In the domestic currency futures market on the NSE, the front month December contract opened on Thursday, at 51.84, higher than spot market rupee. The contract hit an intraday high at 52.09 and registered a low at around 51.84 so far during the day. At the time of writing, the NSE as well as MCX December 2011 USD/INR contract was trading at around 51.97, higher by around 11 paise or 0.21% as compared to previous close at 51.86.