Mumbai: The rupee fell to a two-week low on Thursday, as falling share prices raised concerns whether strong inflows seen so far in 2009 could be sustained in the coming weeks, while the dollar’s rise overseas also dampened sentiment.
The partially convertible rupee ended at 46.7350/7450 per dollar, off a low of 46.82, its weakest since 7 October and about 0.5% below its previous close of 46.485/495. “Clearly, the stock market has been a negative factor,” said a senior trader with a foreign bank.
Indian shares fell for the third straight session and closed 1.3% lower to their lowest in two weeks, hurt by a decline in global equities.
Foreign funds who have been net buyers of more than $14 billion worth of Indian stocks so far in 2009, following net sales of more than $13 billion last year, are a key factor in determining the rupee’s fortunes.
Traders said the dollar’s rise also weighed on sentiment. The dollar rose broadly, rebounding from 14-month low against a currency basket as a slide in global share prices cooled risk appetite and put brakes on a rally in high-risk currencies.
One-month offshore non-deliverable forward contracts were quoting at 46.83/93, weaker than the onshore spot rate.
In currency futures, the active near-month contracts on the National Stock Exchange and MCX-SX were at 46.76, weaker than Wednesday’s 46.51.