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Rupee at 1-week low on choppy equities

Rupee at 1-week low on choppy equities
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First Published: Wed, Oct 21 2009. 06 14 PM IST
Updated: Wed, Oct 21 2009. 06 14 PM IST
Mumbai: The rupee fell to its lowest in more than a week on Wednesday, as a fall in local share prices turned sentiment cautious about the direction of fund flows and some banks bought dollars cheaper to arbitrage offshore.
The partially convertible rupee ended at 46.485/495 per dollar, off an early low of 46.52, its weakest since 12 October and 0.8% below its Tuesday’s close of 46.11/12.
“Stocks turned sentiment negative and there was also good amount of NDF (non-deliverable forward) arbitrage,” said a senior trader with a foreign bank.
The 30-share BSE index Sensex closed 1.24% lower tracking weak global markets.
Foreign capital is a key driver of the rupee and foreign investors ave so far invested more than $14.2 billion, reversing outflows of a more than $13 billion in 2008.
“But choppy stocks raises concern whether these flows would continue to rise,” the trader said.
Traders said a few banks bought dollars cheaper in the local market to arbitrage on price differentials between the domestic and offshore markets.
Spread between the one-year offshore rupee NDFs and one-year onshore forwards widened as traders covered short-dollar positions following a rebound in the dollar from 14-month low.
In currency futures, the active near month contracts on the National Stock Exchange and MCX-SX were at 46.51, from Tuesday’s levels of 46.11 and 46.1050 respectively.
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First Published: Wed, Oct 21 2009. 06 14 PM IST
More Topics: Rupee | Currency | Dollar | Foreign Exchange | Markets |