Rupee treads water; global markets eyed for cues

The rupee was little changed on Friday as the negative impact of weak local shares and a volatile euro was offset by robust corporate dollar inflows, but importer dollar demand capped gains.

The partially convertible rupee ended at 44.72/73 per dollar versus Thursday's close of 44.73/74. Intraday, the local currency moved in 44.6650-44.7625 range.
"There is going to be no trend play in currencies right now. Market is tightly balanced between buyers and sellers," said Ajay Mahajan, managing director and head of financial markets and institutional banking at UBS.
"Global markets will deliver future cues, but the key question for that will be if the U.S. Federal Reserve will roll over QE2 (quantitative easing 2). Till then, the rupee should be in 44.60-45.00 range."
Federal Reserve Chairman Ben Bernanke on Tuesday had acknowledged that the US economy has slowed, but offered no hint the US central bank is considering any more stimulus to accelerate growth.
The euro was at USD 1.4466 at the local market close versus USD 1.4603 on Thursday. The common European unit fell against the dollar on Friday and could extend its losses as investors scale back expectations of the pace of European Central Bank rate hikes and worries over Greek debt return to centre stage.
The index of the dollar against six major currencies was up 0.20%t 74.339 points at local close versus 73.854 points on Thursday.
Indian shares fell for the third week in four on Friday, hurt by slower April industrial output growth and weak world equities, and a lack of positive triggers kept next week's outlook subdued.
The market focus will be on the Reserve Bank of India's interest rate decision on Thursday. The central bank is widely expected to nudge rates higher by 25 basis points.
India's industrial output growth dipped in April, the latest sign that rising cost of credit and inflation are acting as brakes on the economy, which may compel the RBI to pull back from its aggressive monetary policy tightening.
The one-month onshore forward premium was at 25.00 points versus 24.50 points on Thursday. The three-month was at 76.50 points versus 75.50 points while the one-year was at 264.25 points from 254.50 previously.
One-month offshore non-deliverable forward contracts were quoted at 44.93, weaker than the onshore spot rate. In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and the MCX-SX were both at 44.8475 and on the United Stock Exchange at 44.8500, with the total volume at USD 7.01 billion.