* Rupee ends at 53.155/165 vs Tuesday's close of 53.135/145
* India plans to raise $2.25 billion via NTPC share sale on
* Dollar premiums surge on FIIs' hedging related paying
By Subhadip Sircar
MUMBAI, Feb 6 The Indian rupee retreated from an
over three-and-a-half month high to end marginally lower on
Wednesday as continued weakness in local stocks and oil refiner
demand to meet crude payments outweighed dollar inflows ahead of
the government's stake sale in a state-run utility.
Onshore dollar premiums rose to their highest in 14 years as
foreign funds hedged their spot inflows in the forwards markets
as the country gears up to raise around $2.25 billion in a share
sale in NTPC Ltd on Thursday.
More government stake sales are expected in February and
March, although the key event remains the federal budget to be
unveiled late this month. That will be a key test of the
government's resolve to stick to its fiscal deficit target and
avoid populist spending ahead of general elections in 2014.
"The FII inflow has been strong for the past few days and
despite that the demand is pretty good around 53.00. Thus, once
these inflows from FIIs mainly related to OFSs (offer for sale)
start diminishing, INR may come under pressure," said Paresh
Nayar, head of fixed income and forex trading at First Rand Bank
The partially convertible rupee closed at
53.155/165 per dollar, versus its previous close of 53.135/145.
It rose to 52.87 earlier in the session, its highest since Oct.
The one year onshore dollar premium surged to its
highest in 14 years to 355 points versus its previous close of
348 points, a level last seen in late 1998.
That surge came ahead of NTPC's stake sale. The government
also plans to sell shares in state trading company MMTC Ltd
and steelmaker Steel Authority of India Ltd
before the end of the fiscal year.
Still, the spot rupee remained under pressure as domestic
shares ended flat, continuing its weak performance ever since
the Reserve Bank of India last week disappointed investors with
a cautious stance on future monetary policy.
The weakness in the euro against the dollar also
weighed ahead of a European Central Bank meeting, while the
rupee was also pressured by outflows related to gas utility.
In the offshore non-deliverable forwards, the
one-month contract was at 53.43, while the three-month was at
In the currency futures market, the most-traded
near-month dollar/rupee contracts on the National Stock
Exchange, the MCX-SX and the United Stock Exchange all closed at
about 53.37 with a total traded volume of $4.4 billion.
(Editing by Anand Basu)