Mumbai: The Indian rupee weakened marginally on Monday as losses in other Asian currencies weighed on sentiment, and dealers said they would be watching the local stock market for clues on direction of fund flows.
At 10:20am, the partially convertible rupee was at Rs49.98/99 per dollar, 0.2% weaker than its previous close of Rs49.87/88. On Thursday, the rupee had risen as high as 49.34, its highest since 17 February.
“The rupee has weakened a bit tracking lower Asian currencies but now the stocks are going to be the key,” a senior dealer with a foreign bank said, predicting 49.80 to 50.10 band for the day.
Most Asian currencies were weaker against the dollar. The dollar index, a gauge of the US unit’s performance against majors, was up 0.2%.
The euro hit a one-month low against the dollar and a three-week trough versus the yen due to uncertainty over policy steps the European Central Bank may take.
Indian shares seesawed in early trade after rising a third over the past six weeks, with investors awaiting a rate review on Tuesday.
Analysts are almost evenly split on whether the central bank will cut rates at its annual policy review on Tuesday to boost growth.
One-month offshore non-deliverable forward contracts were quoting at Rs50.08/18, weaker than the onshore spot rate.
“There is no clear direction (for the rupee) in the near term till getting clarity on the new government,” J Moses Harding, head of global markets, wrote in a daily note.
Voting in month-long general elections began last week and ends on 13 May.