MUMBAI (Reuters) - The rupee fell to a two-week low on Thursday, aligning with a surge in the global dollar, with losses pruned by dollar selling by large corporates at higher levels.
The global dollar extended a rally begun earlier in the week after strong retail sales data led some analysts to suggest that any slowdown in U.S. growth may be temporary.
Dealers said that a large petrochemical company and an engineering company sold $200-$250 million in the session, helping offset some losses.
Local stocks were largely in range, ending 0.4 percent lower, failing to provide any support to the rupee. A widening of India's trade gap has raised concerns about the current account deficit even as the government grapples with a yawning fiscal gap.
Global crude prices have also been on the boil rising to near three-month highs as geo political tensions rose in the Middle East threatening supply disruptions.
"We expect the rupee to remain under pressure. Crude oil prices have moved up and there has been demand from oil companies. Inflation is lower but not at a level where RBI would be comfortable," said Ashok Mittal, chief executive, Emkay Commotrade.
He expects the rupee to trade in 55-57 range to the dollar in the next one month.
The partially convertible rupee closed at 55.75/76 per dollar as per the SBI closing rate versus its previous close of 55.65/66. It fell to an intraday low of 56.04, its lowest since August 3.
Net long positions on the USD/INR rose to 0.34 as on August 16 as against 0.10 in the previous period, as per a Reuters poll, showing a rise in bearish bets on the rupee.
Cautious investors have been waiting for definite action from the government on reform measures, though there has been no shortage of rhetoric.
Prime Minister Manmohan Singh on Wednesday said that the government would "leave no stone unturned" to bring in fresh money, in an allusion to tax measures that scared foreign investors earlier this year.
The non-deliverable forward premiums rose in the session over previous close, though they were below New York closing levels.
The one-month offshore non-deliverable forward contracts were trading at 56. 1 1, while the three-month was at 56.79.
In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange, all closed at around 55.91 with the total traded volume at around $3 . 7 billion.
(Editing by Anand Basu)
Published Date: Aug 16, 2012 11:16 pm | Updated Date: Aug 16, 2012 11:16 pm