Mumbai: The rupee weakened against the dollar on Tuesday, after having traded steady for most of the day, as a fall in the euro boosted the US currency.
The partially convertible rupee ended at 45.78/79 per dollar, off a low of 45.82 but weaker than Monday’s 45.64/65. It had moved in a 45.55-45.665 band for most of the day.
The stronger dollar was compounded by a fall in the domestic shares, with the BSE benchmark Sensex losing 0.9%, in line with global markets.
“There is no fundamental reason for the dollar to strengthen, so I feel this is a temporary adjustment in positions,” said the chief dealer at a state-run bank.
“We are seeing a good amount of exporters selling (dollars) even at current levels,” he added.
The euro fell against the dollar, to its lowest since early January, after a survey of German economic sentiment came in lower than expected.
“There is a view the euro might fall further tomorrow to $1.45-levels and this might push down the rupee. I see the rupee trading in the range of 45.70-46.10 tomorrow,” the chief dealer said.
Traders said the rupee might breach the 46-a-dollar mark on Wednesday especially if importers, who have unhedged positions, step in to buy dollars on the view the rupee could weaken further.
“This will depend on what sentiment call they take, and a lot will depend on how the US market plays out today as yesterday was a holiday,” said a forex trader at another state-run bank.
One-month offshore non-deliverable forward contracts were quoted at 45.710/890.
In the currency futures market, the most traded near-month contracts on the National Stock Exchange and MCX-SX closed at 45.83.
Total volume traded on both exchanges was moderate at $7.54 billion.
The Reserve Bank of India (RBI) on Tuesday permitted the introduction of currency futures in euro, yen, and pound sterling with immediate effect, a move dealers said would improve liquidity of the futures market.