Mumbai: The rupee weakened on Tuesday in tandem with lower Asian currencies and weighed down by sporadic dollar demand from importers.
The partially convertible rupee closed at Rs47.97/98 per dollar, off an early low of Rs48.04, its weakest since 31 July and 0.3% below its previous close of Rs47.82/83.
“There was a good two-way interest today. Stocks were also playing a very important role,” said Sudarshana Bhat, chief foreign exchange dealer with state-run Corporation Bank.
“The outlook looks biddish. Industrial production data will be watched tomorrow,” he said.
Industrial output probably rose in June for the third month in a row, helped by a rebound in sectors linked to the government’s stimulus spending, a Reuters poll showed on Tuesday. The median estimate was for a 3.3% rise.
Indian shares nosed up 0.4% after falling 5.6% over the past three sessions, but worries a shortfall in crucial monsoon rains will hit economic growth kept investors wary.
Foreign investors have bought a net $367 million worth of shares so far in August, taking net purchases in 2009 to $7.2 billion.
Some sporadic dollar demand was seen from importers, dealers said.
Weaker Asian currencies and the dollar’s firmness versus a basket of six major currencies post the US jobs data rally last week hurt sentiment for the rupee, they added.
The Malaysian ringgit fell along with South Korean won as weaker Asian stocks prompted investors to buy dollars. Other Asian currencies were also mostly weaker compared to the US unit.
One-month offshore non-deliverable forward contracts were quoting at 48.08/18, weaker than the onshore spot rate.
The rupee could head towards 48.50 if it slips past Rs48.10, and can climb to 47.50 if it strengthens beyond 47.90-85, Bhat said.
In the currency futures market, the most traded near-month contract on the National Stock Exchange and MCX-SX closed at 48.0375 and 48.0325 respectively, with the total traded volume on the two exchanges at about $1.8 billion.