Mumbai: The Indian rupee fell to near two-year lows on Tuesday, tracking weaker regional currencies while lower shares triggered concern about further foreign fund outflows.
At 10:12 am the partially convertible rupee was at Rs44.885/895 per dollar, its lowest since December 12, 2006 and 0.6% weaker than its previous close of Rs44.60/61 on Monday.
A senior dealer with a state-run bank said foreign banks were selling dollars at around Rs44.90, but the rupee could slip towards Rs44.95-45.0 if local shares fell sharply.
The US dollar edged up to a one-year peak against a basket of currencies on Tuesday, riding a boost in confidence in the US financial sector after the government seized control of mortgage giants Fannie Mae and Freddie Mac.
India’s main share index dropped more than 1%in early trade, tracking weaker Asian markets that fell on uncertainty over the health of the global economy.
Foreign funds have been net sellers of $7.6 billion worth of Indian shares so far in 2008, a key factor in the rupee’s 12.2% fall against the dollar.
It rose more than 12% in 2007, when foreign funds bought a record $17.4 billion.
One-month offshore non-deliverable forward contracts were quoting at Rs45.08/18, weaker than the onshore spot rate.