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Rupee dips on shares fall, dollar demand

Rupee dips on shares fall, dollar demand
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First Published: Tue, Mar 30 2010. 06 04 PM IST
Mumbai: The rupee fell on Tuesday as customary month-end dollar demand from crude refiners and a fall in local shares triggered selling in the local currency.
The partially convertible rupee ended at 45.08/09 per dollar, after touching 44.88, its strongest since 10 September 2008 and about 0.3% above its previous close of 44.9575/9675 on Monday.
It had touched an intraday low of 45.1450. The longer term outlook for the rupee, however, remained bullish.
A Reuters poll of FX strategists on BRIC currencies on Tuesday showed the rupee strengthening to 43.53 against the dollar by March 2011, supported by buoyant growth in Asia’s third-biggest economy.
Oil is India’s biggest import and refiners are the largest buyers of dollars in the domestic currency market. Demand for dollars tends to peak at the end of each month when refiners make payments for their imports.
“It was the usual month-end demand from refiners that underpinned sentiment, though a fall in shares also contributed to the bearishness,” said a trader with a foreign bank, who expected the rupee to trade in the 44.9-45.15 range on Wednesday.
The BSE benchmark Sensex snapped a four-day rise to close 0.7% lower.
Foreign fund flows into and out of the stock market provide direction to the rupee. Foreign investors have bought shares worth nearly a net $4 billion thus far this year, adding to net inflows of a record $17.5 billion seen in 2009.
In global markets, the euro hit a two-month high versus the yen on relief that Greece will be able to raise funds from the market.
The dollar index versus six majors was down about 0.2%.
One-month offshore non-deliverable forward contracts were quoting at 45.09, close to 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 ended at 45.08 and 45.1625 respectively.
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First Published: Tue, Mar 30 2010. 06 04 PM IST
More Topics: Rupee | Currency | Dollar | Foreign Exchange | Markets |