Mumbai: The rupee eased in tandem with most Asian units on Wednesday, 16 January, as growing fears of a US recession hit global markets, though equity-related inflows were supporting the local unit, dealers said.
At 9:50 am, the rupee was at 39.275/285 a dollar, softening a touch from the last finish of 39.265/275, but within sight of a decade-high of 39.16 hit November.
“There is a degree of risk reversal but flows are still coming in, and while that continues it’s unlikely that the rupee will fall much,” said a senior dealer with a private bank.
Stock indexes in Asian were down between 1 and 3% on Wednesday after a record loss at Citigroup and weak US retail sales entrenched fears the world’s top economy may slide into recession.
India’s benchmark share index fell more than 2% in early deals, extending Tuesday’s 2.3% fall.
Still, interest in Indian equities remained strong, and a run of initial public offerings is expected to keep foreign inflows buoyant. A $3 billion initial public offering Reliance Power was covered more than 10 times on its first day on Tuesday.
Dealers also kept a watchful eye on the central bank, which is widely believed to have bought about $5 billion in the past two weeks in a bid to prevent the rupee from rising rapidly.
The central bank bought about $64 billion in intervention in the first 10 months of 2007, and analysts said it has been active since then in keeping the rupee weaker than 39.20.