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Rupee weakens tracking choppy shares, euro fall

Rupee weakens tracking choppy shares, euro fall
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First Published: Wed, Jun 22 2011. 05 48 PM IST
Updated: Wed, Jun 22 2011. 05 48 PM IST
Mumbai: The rupee edged lower on Wednesday after moving in narrow band, dragged by choppy local shares and worries over the euro’s future course, with traders eyeing U.S. Federal Reserve’s rate decision due at 10:00pm, for more cues on the dollar.
The partially convertible rupee ended at 44.8850/8950 per dollar, weaker than Tuesday’s close of 44.84/85, after moving in a 44.8025-44.9050 range intraday.
Event risk on the euro remained high despite the confidence vote as George Papandreou’s government still faces the arduous task of passing an austerity plan to secure a new bailout from the European Union and IMF.
The Federal Reserve meeting, where Chairman Ben Bernanke is expected to reiterate a dovish stance, could support the euro but analysts said it was vulnerable to a sell-off in light of Greek uncertainty.
“We are broadly following the euro. And the euro itself is stuck in a range. So the rupee was bound to stay in narrow band and see thin volumes,” said a senior foreign exchange dealer at Saraswat Co-op Bank.
“But long-term view on the euro is likely to be bearish. So, the rupee is likely to move in 44.82-44.90 range.”
The euro slipped against the dollar on Wednesday as investors who bought the single currency following a vote of confidence in the Greek government took profits, signalling market concerns that the euro zone debt crisis is far from over.
The euro was $1.4384 at the end of trade in domestic currency market versus $1.4357 on Tuesday, while the index of the dollar against six major currencies was at 74.744 points versus 74.823.
The euro moved in wide band of $1.4346-$1.4432, intraday.
Indian shares erased early gains and slipped 0.1 percent on Wednesday, hurt by foreign fund outflows as rising borrowing costs and stubborn inflation chipped away investor confidence, leading to a bleak near-term outlook.
The one-month onshore forward premium was at 23.50 points versus 25.25 at last close. The three-month was at 74.00 points from 72.75 and the one-year was at 245.25 points from 241.75.
One-month offshore non-deliverable forward contracts were quoted at 45.07, weaker than the onshore spot rate.
In the currency futures market , the most traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all settled at 44.9425, with the total volume at $7.54 billion.
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First Published: Wed, Jun 22 2011. 05 48 PM IST
More Topics: Markets | India | Rupee | Currency | Dollar |