Mumbai: The rupee slipped to a six-month low on Monday as falls in the stock market and fears of a US recession sparked concern that overseas investors would sell local equity holdings and repatriate their funds.
At 10:40 am, the partially convertible rupee was trading at 40.685/695 per dollar, off a low of 40.715, its lowest since 10 September, according to Reuters data. It ended at 40.525/535 per dollar on Friday.
“Obviously, the Sensex is down, much like the Dow Jones and Asian markets,” said a trader with a state-run bank.
“Foreigners are going to be pulling out their money,” he added.
Sensex was down more than 3% on Monday and other Asian markets also fell as sentiment was hit by worries about the US economic outlook after weak US jobs data.
Foreign buying of local shares are a key driver of the rupee. Foreigners have sold $3.4 billion in local equities so far this year, after buying a record $17.4 billion in 2007.
“Also, we’ve seen Indian oil companies buying dollars today for crude oil purchases,” the trader also said.
US oil prices were above $105 a barrel, within sight of Friday’s record high of $106.54. India imports more than two-thirds of its oil, and rising crude prices could widen the trade deficit and put downward pressure on the rupee.