Indian rupee nudges higher before budget, GDP data

The Indian rupee firmed on Monday but trading was in a narrow range as traders awaited the federal budget for direction on investment flows.

Finance minister Pranab Mukherjee, who is began his budget speech around 11 am (0530 GMT), is expected to announce measures to tame fiscal deficit and try to rein in surging inflation.

I will not be taking any speculative positions before the budget is announced, said a senior foreign exchange dealer at a private bank.

Some people fear a populist tinge to the budget given the elections in five states.

At 10:42 am (0512 GMT), the partially convertible rupee was at 45.2526 per dollar, firmer than 45.3132 on Friday.

Gains in the rupee could be limited because of renewed surge in world oil prices, and the dollar's rise overseas. Oil is India's biggest import and state-run oil refiners are the largest buyers of the dollar in the domestic currency market.

US crude futures jumped by nearly $2 towards $100 a barrel on Monday as the worsening situation in Libya fed worries that unrest in West Asia would spread and that oil flows in the region would be disrupted. The dollar found a steadier footing in early Asian trade and crawled off a record low versus the Swiss franc as risk appetite made a tentative comeback, but the mood remained cautious given ongoing tensions in Libya and fears of contagion.

Traders are also awaiting December quarter GDP data around 0530 GMT for more cues on economy's growth trajectory and the outlook for interest rates.

India's economic growth probably slowed to an annual 8.6% in the December quarter, after expanding at 8.9% in the previous two quarters, a Reuters poll showed.

The index of the dollar against six major currencies was at 77.203 points. On Friday, at the end of domestic trade, the index had been at 77.177 points.

The one-month onshore forward premiums were at 28.50 points against 29.75 points on Friday, while the one-month offshore non-deliverable forward contracts were quoted at 45.49, weaker than the onshore spot rate.

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 were all at 45.49, with the total traded volume at about $1.4 billion.