Mumbai: The Indian rupee weakened marginally on Wednesday after see-sawing for most of the day, as concerns over euro zone debt woes kept the market jittery and prevented investors from taking any large positions.
The partially convertible rupee closed at Rs47.02/03 per dollar, 0.1% weaker than its Tuesday’s close of Rs46.95/96. It moved in a band of Rs46.90-47.16 during the session.
“Think customers are waiting for clarity on global markets -- risk aversion, euro, stocks, etc. It’s just too choppy globally to do anything big,” said Ananth Narayan G., head of rates and credit, South Asia, at Standard Chartered Bank.
“Looks like the uncertainity will continue for a few more days. On the dollar-rupee think medium term we will see inflows/exporter selling and eventual rupee strengthening, but for that to happen, we need the global markets to be quiet for a few days,” he added.
Last year, record inflows of $17.5 billion had helped the rupee gain 4.7 percent on the year.
Shares rose 0.25% after two days of declines, helped by a small rise in Chinese and European stocks, but investors continued to be wary as worries over euro zone debt problems lingered.
Foreign funds have been net sellers of $9 million of Indian equities so far in June, after pulling out $2 billion last month.
However, on the year, they are net buyers of about $4.6 billion worth of shares.
Chances of adverse capital flows exist in the medium term if the euro zone crisis deepens, Finance Minister Pranab Mukherjee said on Tuesday.
Dealers said the dollar’s losses against some major currencies helped limit losses in the rupee. Dollar’s index against six major currencies was 0.6 percent lower.
The euro steadied on Wednesday on options demand, holding above a recent four-year low against the dollar, but analysts expected only a brief respite as strains in euro zone bond markets hurt sentiment.
One-month offshore non-deliverable forward contracts were quoted at Rs47.20, weaker than the onshore spot rate.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX closed at Rs47.15 and Rs47.1550, respectively, with the total traded volume on the two exchanges at about $6.7 billion.