The Indian rupee continued to decline against the US dollar for the fifth day in early trade on Monday, on persistent dollar demand from banks and importers on the back of higher dollar in the overseas market.
The currency had tumbled by 30 paise to close at two-and-a-half-month low of 55.51 against the dollar in the previous session on Friday. Today it resumed higher at 55.45 per dollar but declined immediately to 55.61 per dollar before quoting at 55.58 per dollar at 10.40 am. It moved in a range of 55.42 per dollar and 55.61 per dollar during the morning deals.
MCX December gold futures are trading up almost by whopping Rs 200 at Rs 31400 per 10 grams, thanks to the cheap Indian Rupee.
On the other hand the international gold futures were little depresses trading down $ 2 at $ 1749 per ounce as the US dollar strengthened amid caution over developments in Europe. On Friday, they soared $23.20 to settle at $1,751.40, their highest level since Oct. 17.
The drop on Monday came as markets awaited the Eurogroup’s talks to approve disbursal of the next tranche of loans to Greece. The general mood in equity and currency trading also portrayed investor risk aversion, as markets digested the result of elections in Spain’s wealthy Catalonia region.
In the region’s elections, a nationalist party seeking a referendum on independence won less seats than required for an absolute majority, but enough to return as the single largest party in the local parliament.
The ICE dollar index, which measures the greenback against a basket of six other global currencies, rose to 80.269 during Asian trading hours from 80.190 Friday afternoon in North America.
Gold has been in demand in international market with several central banks also increasing gold as a part of their reserves with Brazil a latest one to do so. Gold rallied 11% this year as investors and central banks bought bullion to diversify assets.
According to a data provided by the International Monetary Fund, central banks from emerging markets continued to increase their holdings in October. Brazil, Turkey and Kazakhstan, all increased their gold holdings with an aim to diversify their foreign kitty in the back drop of growing macroeconomic uncertainty and ultra period of ultra loose monetary policies-which threatens currencies debasement.
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