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Rupee dips to 2-month low on euro slide, weak local shares

Rupee dips to 2-month low on euro slide, weak local shares
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First Published: Mon, May 23 2011. 06 16 PM IST
Updated: Mon, May 23 2011. 06 16 PM IST
Mumbai: The rupee hit its weakest level in more than two months on Monday, pressured by the euro’s slide and weakness in local equities, but dollar sales by exporters pulled it off lows.
The partially convertible rupee ended at 45.23/24 per dollar, half a percent below its previous close of 45.01/02. During the day, the rupee had weakened to 45.3225, a level not seen since 15 March.
Demand for the US unit from importers, especially local oil refiners, also weighed on the rupee, but some dollar selling by exporters around the 45.30 level helped pull the rupee off two month lows, traders said.
“The support around 45.30 is not that strong. It is only around 45.50 that rupee is expected to get good support,” said Ashtosh Raina, head of forex trading at HDFC Bank.
“A lot will depend upon how the euro pans out because if dollar strengthens more then we could see rupee move to 45.80.”
The euro fell to a two-month low versus the dollar and a record trough against the Swiss franc on Monday, as investors unwound bullish bets on mounting worries about the region’s debt with many expecting more losses.
The euro was at $1.4017 at end of local rupee trade while the index of the dollar against six major currencies was at 76.231 points.
Indian shares fell 1.82% on Monday, taking cues from global equities, but traders say the recent correction in commodity prices may provide a respite to the local market.
Oil is India’s biggest import item and domestic oil refiners are largest dollar purchasers in local forex market. Crude oil futures slipped more than $3 on Monday due to the peripheral euro zone’s debt crisis.
The one-month onshore forward premium was at 22.00 points versus 22.50 points last close. The three-month was at 64.00 points against 69.25 points and the one-year was at 236.75 points against 271.50 points.
“The spot (rupee) fell today and prompted exporters to receive in forwards, especially in the long-tenures pushing premiums lower,” said a dealer with foreign bank.
The one-month offshore non-deliverable forward contracts were quoted at 45.45, weaker than the onshore spot rate.
In the currency futures market , the most traded near-month dollar-rupee contracts on the National Stock Exchange the MCX-SX and United Stock Exchange were at 45.2750, 45.2750, 45.2775 respectively, with the total volume at $8.96 billion.
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First Published: Mon, May 23 2011. 06 16 PM IST
More Topics: Markets | Rupee | Currency | Asia | BSE |