The Indian rupee inched lower at commencement on Friday, 16 January 2015 tracking a mixed set of Asian currencies. Rupee weakened against the dollar after the Swiss National Bank (SNB) unexpectedly abandoned its minimum exchange rate versus the euro currency on Thursday. The SNB widened the negative interest rate it gives on deposits to minus 0.75% from 0.25% and also decided that the 1.20 per euro cap had to be discontinued. The domestic currency opened lower by 4 paise at Rs 62.10 against the US dollar and fell to a 2-day low of 62.20 from an early high of 62.08 so far during the day. In the spot currency market, the Indian unit was last seen trading at 62.15, down 9 paise or 0.14% as compared to previous close at 62.07.
Rupee ended at 62.07 per dollar after rising to 61.47 per dollar, its strongest level since Nov. 13, as the central bank stepped in to prevent further sharp appreciation in the rupee. Dollar short-covering was seen globally after Swiss National Bank move on removing band on currency also hurt. The partially convertible rupee ended at 62. 19 on Wednesday.
Domestic benchmark indices edged lower in early trade tracking weakness in Asian stocks. Asian shares stepped back on Friday and major currencies mostly stuck to late U.S. levels as investors caught their breath, after Switzerland's unexpected move to abandon its currency cap jolted markets already roiled by plunging commodities prices.
Foreign portfolio investors bought Indian shares worth a net Rs 1738.24 crore yesterday, 15 January 2015, as per provisional data. At the time of writing, the S&P BSE Sensex was down 73.31 points or 0.26% at 28,002.24 while the CNX Nifty was down 14.60 points or 0.17% at 8,479.55.
India's trade deficit narrowed mainly on account of falling imports due to slump in crude prices and lower gold purchases. Trade deficit during December fell sharply to $9 billion from $16.8 billion in November 2014. While exports for the month came in at $25.40 billion from $25.96 billion in November, imports declined to $34.83 billion from $42.82 billion in the previous month. The dollar index, which measures the US currency's strength against major currencies, was trading at 92.111, down 0.26% from its previous close of 92.352.
In the global currency market, the euro hovered above an 11-year trough early on Friday as investors wagered the Swiss move to abandon its currency cap meant it was almost certain the European Central Bank would launch large-scale bond buying next week.
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