Mumbai: Owing to flat markets and low dollar demand by importers, the rupee clawed back earlier losses and rose marginally on Wednesday.
The partially convertible rupee closed at Rs48.69/70 per dollar compared with Tuesday’s close of Rs48.72/73.
“Absolutely there is no (dollar) demand. In a slowing economy, naturally non-oil imports and oil imports are slowing,” a treasurer with a private sector company said.
Indian economy is falling and the government estimates its expansion of 7.1% in fiscal 2008-09, compared with last year’s 9.0% growth.
Analysts expect the pace of growth slow to near 6 percent in the next fiscal year.
Earlier, the rupee had fallen to an intraday low of Rs48.90, pulled down by the dollar’s strength against major currencies, while early weakness in domestic stock markets also soured sentiment.
But the local currency pulled back as stocks trimmed losses of nearly 2% to end marginally lower, and as a US bank sold dollars on behalf of a large construction company, dealers said.
Foreigners have bought about $185 million worth of shares in the last four trading sessions, but are still net sellers of about $1 billion in 2009. They had dumped shares worth more than $13 billion in 2008, pushing the rupee down 19.1%.
The dollar index, a gauge of US unit’s performance against major units overseas, was up 0.1%.
Dealers said they would watch Thursday’s inflation data for cues on the outlook for interest rates.
The Reserve Bank of India has aggressively slashed its rates since mid-October. The repo rate, at which it lends to commercial banks, has been cut by 350 basis points to 5.5%.