Rupee rises after 4 sessions of losses on corporate dollar selling
The rupee rebounded sharply on Tuesday after four consecutive sessions of losses as a weakening dollar prompted exporters to sell the US currency while a spurt in buying by foreign investors in domestic debt also helped. The yen gained sharply against both the dollar and the euro as investors sought the traditional safety of the Japanese currency amid end-of-year nerves over economic risks ahead. Sentiment was also buoyed after foreign institutional investors bought a net of about 8.36 billion rupees ($131.59 mln) of government bonds on Monday, according to data available on the National Securities Depository Ltd website. "Some corporate dollar selling and rise in major Asian currencies, led by the Japanese yen, are aiding the rupee," said Hari Chandramgethen, chief forex dealer at South Indian Bank Ltd. The partially convertible rupee rose to 63.47 to a dollar after touching a low of 63.79, while the 10-year benchmark bond yield fell 7 basis points to 7.86 per cent.
Euro dips to 29-month low as Greek vote sparks anxiety
The euro dipped to a 29-month low against the dollar on Tuesday as the announcement of a snap election in Greece threw the country into a fresh round of political turmoil. The austerity-minded leading coalition in Greece failed on Monday to secure enough votes in parliament to elect a president, paving the way for an early general election next year. The markets are now concerned that the leftwing opposition Syriza party may win the election and derail Greece's international bailout. After Greece nearly crashed out of the euro in 2012, when it had to accept a bailout in return for austerity measures, the country had just returned to economic growth this year and ended a four-year exile from bond markets.
The euro touched $1.2130, its lowest since August 2012. The euro's slip against the dollar has been limited thus far -- it was down only 0.2 percent on the day -- as the outcome of the Greek parliamentary vote was already priced in by some. But other participants urged caution, suggesting political turmoil in Greece was only in its early stages. "Several weeks of opinion polling lie ahead and, as the election date approaches, we should expect the euro to become gradually more sensitive to any apparent shifts in the public mood," Gareth Berry, a forex strategist at UBS, wrote in a note to clients.A dip below $1.20 for the euro could be a distinct possibility if the risk, however remote, of a Greek exit from the euro zone re-emerges as it did in 2012, he said.
The Greek political situation adds to the burden placed on the common currency, already weighed by prospects of the European Central Bank implementing further easing measures in 2015 to shore up the euro zone economy and ward off deflation. "The ECB policy meeting on Jan. 22 of course remains an important euro event, but developments in peripheral euro zone nations like Greece now also need attention," said Shinichiro Kadota, chief Japan FX strategist at Barclays in Tokyo.
The rupee rebounded sharply on Tuesday after four consecutive sessions of losses as a weakening dollar prompted exporters to sell the US currency while a spurt in buying by foreign investors in domestic debt also helped. The yen gained sharply against both the dollar and the euro as investors sought the traditional safety of the Japanese currency amid end-of-year nerves over economic risks ahead. Sentiment was also buoyed after foreign institutional investors bought a net of about 8.36 billion rupees ($131.59 mln) of government bonds on Monday, according to data available on the National Securities Depository Ltd website. "Some corporate dollar selling and rise in major Asian currencies, led by the Japanese yen, are aiding the rupee," said Hari Chandramgethen, chief forex dealer at South Indian Bank Ltd. The partially convertible rupee rose to 63.47 to a dollar after touching a low of 63.79, while the 10-year benchmark bond yield fell 7 basis points to 7.86 per cent.
The euro dipped to a 29-month low against the dollar on Tuesday as the announcement of a snap election in Greece threw the country into a fresh round of political turmoil. The austerity-minded leading coalition in Greece failed on Monday to secure enough votes in parliament to elect a president, paving the way for an early general election next year. The markets are now concerned that the leftwing opposition Syriza party may win the election and derail Greece's international bailout. After Greece nearly crashed out of the euro in 2012, when it had to accept a bailout in return for austerity measures, the country had just returned to economic growth this year and ended a four-year exile from bond markets.
The euro touched $1.2130, its lowest since August 2012. The euro's slip against the dollar has been limited thus far -- it was down only 0.2 percent on the day -- as the outcome of the Greek parliamentary vote was already priced in by some. But other participants urged caution, suggesting political turmoil in Greece was only in its early stages. "Several weeks of opinion polling lie ahead and, as the election date approaches, we should expect the euro to become gradually more sensitive to any apparent shifts in the public mood," Gareth Berry, a forex strategist at UBS, wrote in a note to clients.A dip below $1.20 for the euro could be a distinct possibility if the risk, however remote, of a Greek exit from the euro zone re-emerges as it did in 2012, he said.
The Greek political situation adds to the burden placed on the common currency, already weighed by prospects of the European Central Bank implementing further easing measures in 2015 to shore up the euro zone economy and ward off deflation. "The ECB policy meeting on Jan. 22 of course remains an important euro event, but developments in peripheral euro zone nations like Greece now also need attention," said Shinichiro Kadota, chief Japan FX strategist at Barclays in Tokyo.
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