MCX Commodity News

The Indian rupee continued to remain under pressure on Wednesday, October 31, 2012 with disappointment over the Reserve Bank of India decision to keep the repo rate on hold at 8 percent and compounded after the central bank signalled no further policy easing would take place until the January-March quarter of next year. Rupee recovered slightly from a five-week low hit yesterday to end the session with mild gains on the back of a falling dollar but extended its losses today. The domestic currency opened at Rs 53.96 to a dollar and fell to a low of 54.30 so far during the day as local equities remained close to the red line. In the spot currency market, the Indian unit was last seen trading at 54.17, lower by around 20 paise or 0.36% as compared to previous close at 53.98.

Domestic shares witnessed a bout of volatility since early hours today with the 50-unit S&P CNX Nifty having hit its lowest level in more than 3-1/2 weeks. Most Asian stocks were in red on Wednesday. Provisional data showed that foreign institutional investors (FIIs) were net sellers of Indian stocks on Tuesday, 30 October 2012. FIIs sold shares worth a net Rs 191.53 crore on Tuesday, 30 October 2012, as per provisional data from the stock exchanges. At the time of writing, the BSE Sensex was up 40.67 points or 0.22% to 18,471.52 while the S&P CNX Nifty was up 6.85 points or 0.12% to 5604.75.

The Reserve Bank of India on Tuesday, 30 October 2012, said it has decided to reduce the cash reserve ratio (CRR) of scheduled banks by 25 basis points from 4.5% to 4.25% of their net demand and time liabilities (NDTL) effective the fortnight beginning November 3, 2012. As a result of this reduction in the CRR, around Rs 17500 crore of primary liquidity will be injected into the banking system. The central bank kept its key policy rate viz. the repo rate unchanged at 8% citing high inflation. The central bank also cut its baseline economic growth forecast for the fiscal year to 5.8 percent from 6.5 percent, while raising its estimate for wholesale price inflation to 7.5 percent from 7 percent. The RBI's decision comes despite increased political pressure from the government, which last month unveiled a slew of fiscal and economic reforms.

Meanwhile, the euro also hovered above last week's lows after a solid Italian debt auction and data showing Spanish economy contracted slightly less than expected in the third quarter. Against the dollar, the single currency was at $1.2959, having again found good support just below $1.2900. That helped keep the single currency well within its $1.2800/$1.3200 range seen since mid-September.

In the domestic currency futures market on the NSE, the forward month November contract, opened at 54.34 on Wednesday, October 31, 2012, higher than the spot market rupee. The contract hit an intraday high at 54.47 and registered a low at around 54.24 so far during the day. At the time of writing, the NSE November 2012 USD/INR was trading at around 54.37, up almost 8 paise or 0.15% as compared to previous close at 54.29.