Mumbai: The Indian rupee weakened on 26 May on month-end dollar buying by oil refiners and slowing inflows into local stocks as investors concerned by slowing growth and rising inflation stayed on the sidelines.
At 10.10 a.m., the rupee was quoted at 42.755/765 per dollar, 0.14% weaker than 42.69/70 per dollar on Friday. It hit 43.21/dollar last week, a level it last traded in early April 2007.
Oil traded close to $133 a barrel after having hit a record above $135 on Thursday. India imports most of its oil needs and refiners are the biggest buyers of dollars in the currency market, with their demand tending to peak towards the end of each month.
“The rupee is slightly weaker, it is mainly on oil buying and there are not too many exporters in the market at this moment,” a dealer with a state-run bank said.
“It is likely to trade in a narrow 42.72-42.85 band for the rest of the session,” the trader said.
Asian stocks fell more than 1% on 26 May, with regional shares outside Japan hitting a one-month low, as investors feared rising inflation and sluggish U.S. economic growth would seriously dent consumer demand.
India’s main stock index opened down 1.09% and soon extended its losses, raising concerns of declining inflows into the system against the backdrop of slowing domestic growth.
Foreigners have sold more than $3 billion of Indian stocks so far this year and the benchmark stock index is down more than 18% in 2008. Foreigners bought $17.4 billion of stocks in 2007, when the stock market rose 47%.