Rupee erases early gains on equities, dollar
Rupee erases early gains on equities, dollar
Mumbai: The Indian rupee gave up early gains on Tuesday as a fall in local shares reinforced concerns foreigners would sell equities to repatriate funds in the end of the year, with the euro’s fall versus the dollar also weighing.
The partially convertible rupee ended at 46.71/72 per dollar, off an intraday low of 46.5750 and steady from its close of 46.705/715 on Monday.
“The rupee mostly tracked stocks and euro. There was no impact of Moody’s decision," said a senior dealer with a foreign bank.
Moody’s Investors Services raised its outlook on India’s local currency rating to positive from stable, citing a strong external position and resilience to the global credit crisis.
Moody’s current local currency rating for India is Ba2, two notches below investment grade. By comparison, Standard & Poor’s and Fitch rate India at the lowest rung of investment grade.
The share market fell 1.3% to its lowest close in more than two weeks, with sentiment hit by weaker world stocks and expectations the central bank may tighten policy to curb rising inflationary pressures in Asia’s third-largest economy.
Foreign funds have bought $16.5 billion of Indian equities so far this year, data from Nomura showed, helping drive a 75% rally in the main stock index.
The inflows have also helped the rupee rise nearly 12% from its record low of 52.2 hit in early March.
The euro’s fall to a 2-1/2-month low against the dollar, on concerns about the health of euro zone banks, also weighed on the rupee on Tuesday. The dollar index against six majors was up 0.7%.
One-month offshore non-deliverable forward contracts for the rupee were quoted at 46.69/79, close to the onshore spot rate.
In currency futures, the most traded near-month contracts on the National Stock Exchange and MCX-SX were at 46.75, steady from Monday.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!