USD/INR Trades Above 55.0

06:58, 19th November 2012

(RTTNews) - The Indian rupee extended Friday's downtrend versus the US dollar on Monday, falling below the 55.0 per dollar mark for the second consecutive session as caution prevailed ahead of a "no-confidence motion" against the ruling UPA government in the winter session of Parliament.

The Trinamool Congress, which quit the government over two months back, announced over the weekend that her party would move a "no confidence" motion in the house against Congress-led UPA II government, rendering investor mood cautious despite firm global cues.

Most Asian markets rose and European markets ended a three-session losing streak, after U.S. President Barack Obama expressed confidence that he and Congress would reach a deal on how to cut the budget deficit of nearly $1.1 trillion, which amounts to more than 7 percent of the nation's gross domestic product.

The benchmark BSE Sensex ended the session up 30 points or 0.16 percent at 18,339, with only 13 of its components advancing. The broader Nifty index slipped by 3 points or 0.05 percent to 5,571.

The rupee fell as low as 55.2050 against the US dollar but managed to stay a few pips below Friday's fresh 2-month low of 55.2350. The rupee is heading towards a major support level of 56.0 versus the greenback, a level set in early September. The near-term bearish target for the domestic unit is seen around the 55.50/60 area.