Mumbai: The rupee weakened further on Thursday tracking weak domestic shares as well as losses in Asian peers and the euro against the dollar. Dealers expect mute dollar inflows to also weigh on the rupee during the day.
“There is some exporter selling, but negative stocks, weak euro and Asians are pulling the rupee down. I expect rupee to move in Rs 45.50-45.70 band in the day,” said Rohan Naik, head of forex trading at Standard Chartered Bank in Mumbai.
At 10:48am, the partially convertible rupee was at Rs 45.58/59 per dollar, down 0.3% from Wednesday’s close of Rs 45.45/46. It fell to Rs 45.64 in early trade.
Indian shares fell as much as 0.8% so far in trade on Thursday, with financials leading the decline, tracking weak Asian peers.
“We expect the stock market to remain bearish in Asia. There is not much (dollar) inflows into India and then we have the monetary policy also coming up next week. So, overall, market is not bullish on rupee,” said a dealer at a foreign bank.
Banks have not been witnessing major dollar inflows into a share sale by Tata Steel, currently under way.
Tata Steel, the world’s seventh-largest steelmaker, has raised Rs 508 crore ($111.4 million) from anchor investors and aims to raise as much as Rs 3,477 crore from the issue that closes on Friday.
“There could be some (dollar) inflows towards Tata Steel public issue, but not too much to have any substantial impact on rupee,” Standard Chartered’s Naik said.
Foreign funds are net sellers of $671.2 million worth of shares in the year to Tuesday after pumping in a record $29.3 billion in 2010.
One-month offshore non-deliverable forward contracts were quoted at 45.90, weaker than the onshore spot rate.
The euro fell on profit taking on Thursday, after having extended its rally to a two-month high above $1.35 overnight, bringing a key technical level in focus that could throw a speed-bump in its path.
The index of the dollar against six major currencies was up 0.11% at 78.723 points.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange, United Stock Exchange, were both at 45.6500, and on the MCX-SX it was 45.6525. Total traded volume on the three exchanges was about $1.2 billion.