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Rupee drops a second week as overseas funds sell stocks

Rupee drops a second week as overseas funds sell stocks
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First Published: Fri, Aug 21 2009. 10 53 PM IST
Updated: Fri, Aug 21 2009. 10 53 PM IST
Mumbai: The rupee fell for a second week, its worst run in two months, as concerns the global economy may not recover soon from a slump prompted overseas funds to sell emerging market assets.
The rupee approached a one-month low as data from the stock market regulator showed foreigners sold $378 million (Rs1,840 crore) more local equities than they bought this week, the most since the five days to 19 June.
Investors shunned emerging market assets as China’s stocks slumped a third week on concern measures to curb lending in the world’s third biggest economy will choke off a recovery.
Sensex has dropped in two of the three weeks this month.
“The rupee’s movement is driven by the trend in equity markets where the prevailing sentiment is not in favour of investing in riskier assets,” said Roy Paul, assistant manager of treasury at Federal Bank Ltd in Mumbai. “I am expecting the rupee to decline in coming days.”
The rupee fell 0.7% this week to 48.605 per dollar at close, according to data compiled by Bloomberg.
It reached 49 on 17 August, the lowest intraday level since 13 July. The currency may drop to 49.10 by next week, Paul added.
Offshore contracts indicate bets the rupee will trade at 48.73 to the dollar in a month, compared with expectations for a rate of 48.32 a week ago.
The rupee rose for a third day on Friday on speculation some exporters converted overseas earnings after it reached a one-month low.
“Some firms with foreign-exchange receivables are observing the dollar is not able to sustain gains,” said Vikas Babu, a currency trader at state-owned Andhra Bank. “They probably chose to sell some dollar holdings today.”
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First Published: Fri, Aug 21 2009. 10 53 PM IST
More Topics: Rupee | Money | Stocks | Andhra Bank | Federal Bank |