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Rupee off 6-week low; RBI suspected of dollar sale

Rupee off 6-week low; RBI suspected of dollar sale
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First Published: Thu, May 06 2010. 04 00 PM IST
Updated: Thu, May 06 2010. 04 00 PM IST
Mumbai: The Indian rupee pulled back from six-week lows on Thursday afternoon and traders suspected the Reserve Bank of India may have sold dollars around Rs45.45 to halt the unit’s slide.
At 1:50pm, the partially convertible rupee was at Rs45.28/29, after hitting Rs45.46, its lowest since 26 March, and below Rs44.935/945 at the previous close. At the day’s low, the rupee was down 1.2% on the day.
“I suspect they were in around Rs45.45 - we saw selling by the suspects - and clearly the upmove in the dollar-rupee was a stop trigger of shorts,” a treasurer at a foreign bank said.
Three other dealers also said the central bank may have sold dollars around that level. Another dealer said exporters were also selling dollars.
The rupee was still weighed down by lower shares and the dollar’s gains versus majors.
Shares were trading down 0.7%, extending their fall to a fourth day, as euro zone debt worries dented global investor sentiment.
Capital flows into and out of the stock market are key to the rupee’s fortunes. So far in 2010, foreigners have bought $6.5 billion worth of shares, adding to record inflows of $17.5 billion in 2009.
The dollar index, the measure of the US unit’s performance against six majors was up 0.3 percent and dealers said it would be closely watched for direction.
The euro extended its losses against the dollar and yen on Thursday, dropping to a fresh 14-month low below $1.2770 and hitting a two-month low against the Japanese currency as concerns about debt problems in the euro zone mounted.
One-month offshore non-deliverable forward contracts were quoted at Rs45.42, weaker than the onshore spot rate.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX were both at 45.3675, with the total traded volume on the two exchanges at a high $5.7 billion.
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First Published: Thu, May 06 2010. 04 00 PM IST
More Topics: Markets | India | Rupee | Currency | Foreign Exchange |