Mumbai: The Indian rupee came off day’s lows as state-run banks sold dollars likely on behalf of the Reserve Bank as losses in shares and higher offshore forwards tried to push to unit towards record lows, dealers said.
At 1:40pm, the partially convertible rupee was at Rs51.79/81 per dollar, off a low of Rs52.12, but still below its previous close of Rs51.53/55.
Dealers said there was dollar demand due to high non-deliverable forward rates. Banks buy dollars locally and sell it offshore to take advantage of the difference in the two prices.
One-month offshore non-deliverable forward contracts were quoting at Rs52.12/22 per dollar, weaker than the onshore spot rate.
Losses in shares also weighed. India’s main share index fell more than 2% to its lowest in more than four months on Thursday, as a half percentage point rate cut by the central bank was seen as too little to lift faltering growth.
The most traded near-term currency futures contracts on the National Stock Exchange and the MCX-SX, were both quoting at Rs51.97 per dollar, with the total volume at $547.479 million.