Mumbai: The rupee weakened on Thursday as a drop in the stock market triggered concerns foreign fund inflows could slow down. The dollar’s strength against major currencies also weighed.
Dealers said volume was light as state-run bank employees began a two-day nationwide strike for higher wages and pension. Government controlled banks account for a bulk of foreign exchange transactions.
The partially convertible rupee ended at Rs47.68/69 per dollar, 0.3% weaker than Wednesday’s Rs47.52/53. On Tuesday, the rupee had climbed to Rs47.43 - its highest since 12 June.
“It was a very thin market today with nationalized banks mostly staying away, with the drop in stocks also dampening sentiment,” a dealer with a private sector company said.
Dealers expected volume would remain low on Friday and they would watch the US payroll data.
After the market had shut, the European Central Bank kept interest rates on hold at a record low on Thursday as it waited to see the impact of efforts so far to revive the economy and credit flows.
The dollar index, a gauge of the US unit’s performance versus six majors, was up 0.4%.
Indian shares fell 2.45% on Thursday, with automakers such as Mahindra & Mahindra, Tata Motors and Maruti Suzuki leading the drop in the last hour of trade.