Mumbai: The rupee hit its lowest in two weeks on Monday, as the dollar’s rise on concerns over fraud charges against Goldman Sachs triggered demand for the US currency from importers and lower share prices weighed down sentiment.
The partially convertible rupee ended at 44.73/74 per dollar, about 0.9% weaker than last Friday’s close of 44.32/33. It hit an intraday low of 44.7450, its weakest since 5 April, according to Thomson Reuters data. “Goldman has triggered more buying of dollars. The dollar is seen as a safe currency at this juncture,” said a senior trader with a foreign bank, adding the Goldman charges have raised risk aversion among investors and buying in stable currencies.
The US Securities and Exchange Commission (SEC) last Friday accused the Goldman Sachs Group of fraud in the structuring and marketing of a debt product tied to subprime mortgages.
The dollar index against six major currencies was about 0.5% stronger. The dollar and yen rose as concerns over Goldman and a delayed EU/IMF meeting on Greece encouraged inflows into low-yielding currencies.
A fall in local equities also raised some uncertainty whether the rupee could sustain its recent gains. The rupee has gained more than 4 percent so far in 2010 mainly due to portfolio inflows into Asia’s third-biggest economy.
The benchmark BSE share index fell more than 1 percent lower on concerns of another round of rate hikes in the central bank’s annual policy statement on Tuesday.
A Reuters survey showed most economists expected an increase in key interest rates by the Reserve Bank of India on Tuesday.
One-month offshore non-deliverable forward contracts were at 44.77, slightly weaker than the onshore spot rate.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX both ended at 44.77, with the total traded volume on the two exchanges at about $9.1 billion.