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Rupee dips to 1-month low on weak shares

Rupee dips to 1-month low on weak shares
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First Published: Tue, Aug 31 2010. 06 24 PM IST
Updated: Tue, Aug 31 2010. 06 24 PM IST
Mumbai: The rupee fell to its lowest level in more than a month on Tuesday as losses in domestic shares and month-end dollar demand outweighed positive sentiment due to losses in the dollar versus major currencies.
The partially convertible rupee closed at 47.07/08 per dollar, after touching 47.0950, its weakest since 22 July, and 0.3% weaker than 46.91/92 at close on Monday. The unit fell 1.4% in August.
“There was some month-end dollar demand seen in the morning. I expect the rupee to be rangebound in the near-term and 47.20 would be the first test. I do not think we will see very sharp moves. Two-way moves will be more prevalent,” the head of foreign exchange trading at a private bank said.
Oil is India’s biggest import and refiners are the largest buyers of dollars in the domestic currency market, with demand tending to peak at the end of each month, when they make payments for their imports.
Dealers said losses in other Asian currencies also weighed on sentiment. The index of the dollar against six majors, however, was down 0.1% and helped limit a sharper decline in the rupee.
Indian shares fell 0.3% on Tuesday to their lowest close in a month as shaky global markets and concerns about the US economy cast a shadow on the outlook for risk appetite.
Foreign fund flows into stocks have a large impact on the rupee’s fortunes and have, so far in 2010, reached $12.7 billion, in addition to last year’s record $17.5 billion inflows.
The US government’s monthly employment report is due on Friday. The data will be monitored for confirmation that the economic recovery is indeed losing momentum. The data will also impact the rupee.
One-month offshore non-deliverable forward contracts were quoted at 47.30, weaker than the onshore spot rate, suggesting a bearish near-term outlook.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX closed at 47.2525 and 47.2550 respectively, with the total traded volume on the two exchanges at about $5.3 billion.
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First Published: Tue, Aug 31 2010. 06 24 PM IST
More Topics: Rupee | Dollar | Currency | GDP | Economy |