The rupee lost around 1.4 per cent against the dollar over the past week, closing at 53.8. Poor factory output (IIP) numbers, lower GDP estimates and higher inflation figures affected the performance of the rupee.

Data released on Tuesday showed that industrial output for December 2012 grewat -0.6 per cent over the same month the previous year. This is slightly better than the figure for November 2012 at -0.8 per cent.

Due to downward revision in services sector estimates, GDP estimate for FY 2012-13 was revised to 5 per cent which is lower than the 5.7 per cent estimated earlier by the Government and the RBI. Growth in consumer price inflation at 10.79 per cent in December 2012 was also higher than the 10.36 per cent recorded in November 2012.

Comments by RBI Governor Duvvuri Subbarao that the nation’s current-account deficit will be significantly higher than the 4.2 per cent of gross domestic product recorded in FY 2012 also added to the negative sentiment towards the rupee.

Since the foreign portfolio inflows related to the offer for sale for OIL India and NTPC will now halt, rupee is not likely to get support from that quarter.

One-month implied volatility, a measure of expected moves in exchange rates that is used to price options, decreased by 18 basis points to 9.34 for the week. Three-month onshore rupee forwards were at 54.88 a dollar and offshore non-deliverable contracts were at 54.77 a dollar on Tuesday compared to 54.14 and 53.82, respectively, last week. The rupee was down against all the G-10 countries.

The euro weakened on comments by Mario Draghi, President of European Central Bank, that a stronger euro will affect the recovery of the Euro Zone. It was down by about 0.4 per cent against the dollar and was trading around 1.3455

Dollar strengthened as record petroleum exports narrowed trade deficit to $38.5 billion. It was the lowest since January 2010. The dollar index strengthened to 80.2 and was up 0.7 per cent for the week.

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