LM:Rupee gives up gains against dollar on fresh bout of risk aversion
Mumbai: The rupee gave up all its early gains against the US dollar on Wednesday after dealers turned risk averse and covered their dollar positions on reports that China’s biggest banks tripled the amount of bad loans write-offs.
Dealers bought dollars after Bloomberg reported that Chinese banks wrote off bad loans in the first half of the year, possibly cleaning up their books ahead of a likely fresh wave of defaults.
Industrial and Commercial Bank of China Ltd (ICBC) the world’s most profitable lender, and its four largest rivals wrote off a total of $3.65 billion in the first six months of 2013 after the loans were not repaid, Bloomberg said.
“That news has again led to fears of risk aversion. The rupee which had a strong opening also has fallen as Asian markets weakened around lunch time in Tokyo,” said a dealer with a private sector bank.
The Indian currency dropped to Rs.61.67 per dollar, after opening at Rs.61.0775 per dollar on Wednesday. At 2.30pm it was trading at Rs.61.58 per dollar up 0.12% from Tuesday’s close of Rs.61.65.
The Japanese Nikkei fell 1.95% to end at 14,426.05 while Hang Seng fell 1.36% to close at 22,999.95 points. Shanghai Comp ended at 2,183.11, down 1.25%
Dealers do not expect the rupee to go back to its intra-day highs on Wednesday. “It will be difficult for the rupee to rise above the 61.40 per dollar mark and it is unlikely that it will fall below Rs.61.70 per dollar today,” said the dealer with the private sector bank on Wednesday.
Since January this year, the rupee has weakened 10.69% and has lost the second most after the Japanese yen among Asian currencies during that period.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 79.322, up 0.12% from the previous close of 79.230.
India’s benchmark Sensex was trading at 20,641.05, down 1.07% or 223.92 points from the previous close.
The benchmark 10 -year bond was trading at 8.595%, down from previous close of 8.612%. It opened at 8.609% and touched a high and a low of 8.609% and 8.546% respectively.
The overnight call money rate was trading at 9.05%, up from previous close of 9%. It opened at 9.05% and touched a high and a low of 9.05% and 9% respectively.
