The rupee advanced marginally on Monday on the back of a broad-based rally in the domestic stocks, but trading was quiet due to Christmas holidays in the key overseas markets across the world. The rupee closed the day at 52.71 per US dollar after touching a day's low of 52.9350. In local shares market, the BSE Sensex ended up 1.5% and the NSE Nifty closed up 65 points or 1.4% over the previous close.
The immediate trend remained subdued as traders are staying on the sidelines ahead of the yearend. The recent actions taken by the Reserve Bank of India to curb speculation has also kept appetite subdued. The depreciation momentum of the Indian rupee is likely to sustain due to negative factors like rising current account deficit, weak capital account and fear of rising fiscal deficit.
In the global market, the EURUSD and GBPUSD remained stable with the closure of major global markets on Monday. However, the euro outlook is weak before Italy sells bills and bonds this week amid concern Europe’s debt crisis will drive up borrowing costs for the region’s larger economies. Italy is scheduled to sell 9 billion euros ($11.8 billion) of 179-day bills and as much as 2.5 billion euros of zero-coupon 2013 bonds tomorrow. The nation will auction debt due in 2014, 2018, 2021 and 2022 the following day. Ten-year bond yields in Italy advanced six basis points to 6.98 percent on Dec. 23, approaching the 7 percent level that spurred Greece, Ireland and Portugal to seek bailouts.
The US dollar and Japanese yen is set to advance versus most of its major peers this month as concern the crisis in Europe will damp global growth boosted demand for the currency as a refuge. The yen has gained against all 16 most-traded peers this year, strengthening 4.1 % against the US dollar and 6.6% versus the euro. The US dollar has now started gaining v/s the euro, GBP, CHF and major emerging Asian currencies.
Today, emerging currencies may come under mild pressure as Asian stocks slide. The MSCI Asia Pacific Index fell 0.2 percent to 113.61, at the time of writing. Asian stocks were under pressure as the Bank of Japan warned of downside risks to the economy and South Korean consumer confidence slid.