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Rupee hits weekly low as local stocks register biggest monthly loss

Rupee hits weekly low as local stocks register biggest monthly loss
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First Published: Tue, Sep 18 2007. 01 56 AM IST
Updated: Tue, Sep 18 2007. 01 56 AM IST
Mumbai: The rupee fell to the lowest in almost a week as the biggest loss in local stocks in a month stoked concern overseas funds may take money out of the country.
The currency also dropped on speculation overseas funds were selling rupees because of a decline that was the most in more than a month in the offshore non-deliverable forwards market.
“The stock market is showing a negative trend and that’s having a bearing on the rupee,” said Rohan Lasrado, a currency trader at HDFC Bank Ltd in Mumbai. “Also, there was some rupee selling in the offshore market.”
The rupee weakened 0.2% to Rs40.55 per dollar at the close of trading in Mumbai, according to data compiled by Bloomberg. The currency rose as high as Rs40.43 earlier.
The Bombay Stock Exchange’s Sensitive Index lost 0.6% on Monday following a four-week rally.
On Monday, the rupee fell the most since 16 August in the overseas forwards market. Investors, who want to buy dollars in a month, using rupees need to pay a premium of 0.21% more than the current exchange rate, compared with 0.1% on 14 September, according to data compiled by Bloomberg. Forward contracts are agreements in which assets are traded at a fixed price for later delivery.
The rupee gained earlier after data from the stock market regulator, the Securities and Exchange Board of India (Sebi), showed funds based abroad, which sold more shares than they bought in August, have been net buyers this month. The rupee also climbed on speculation India’s economic growth is attracting increased inflows of private equity investment.
“The outlook is positive for the rupee as capital inflows remain strong,” said V. Ravi Kumar, senior director of treasury at Mumbai-based IDFC Ltd. “A significant increase in private equity flows is providing additional support to the currency.” Overseas funds bought an average $93million (Rs375 crore) a day in shares more than they sold in September, according to Sebi.
They were net sellers of shares worth $85 million a day in August.
Asia’s fourth largest economy grew 9.3% in the three months ended 30 June, from 9.1% in the previous quarter.
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First Published: Tue, Sep 18 2007. 01 56 AM IST