Author: Jaspreet Kalra
MUMBAI, Feb 27 (Reuters) – The Indian rupee hovered near the psychologically important $91 mark on Friday as demand for dollars rose as non-deliverable forward contracts expired and state banks sold dollars.
The Asian currency was trading at 90.95 against the dollar, down slightly from the previous day’s close of 90.9050.
Investors are awaiting India’s October-December GDP data, which will be the first in a new series that will improve accuracy and use more granular price deflation to address concerns raised by economists. A Reuters poll forecast year-on-year growth of 7.2%.
India’s stock benchmark BSE Sensex and Nifty 50 fell about 0.7% each, lagging regional stocks with the biggest declines in financial stocks.
Traders said that pressure on the rupee, apart from increased demand to buy dollars at the daily reference rate, was offset by dollar quotes from state-run banks.
The reference rate is the benchmark used to settle contracts and typically attracts concentrated U.S. dollar buying and selling. ‌Last traded at 0.25/0.50 paise premium, indicating demand for the US dollar.
DBS senior economist Radhika Rao said the rupee “steadied in a tight range of 90.85-90.95 as large maturities of non-deliverable assets offset the benefits of resumption of foreign equity inflows and a weaker dollar this month”.
Foreign investors bought more than $2.5 billion worth of local stocks on a net basis this month, reversing three consecutive months of net outflows worth about $7 billion.
DBS’s Rao said changes to the deflator methodology in the new GDP series will focus on the impact on nominal and real GDP growth. Nominal and real GDP growth are important benchmarks for local and foreign investors to invest in Indian assets.
Nominal GDP reflects output measured at current market prices, while real GDP is adjusted for price changes.
In global markets, the U.S. dollar index held steady at 97.7, while Asian currencies were flat or slightly weaker.
(Reporting by Jaspreet Kalra; Editing by Rashmi Aich and Mrigank Dhaniwala)
