Mumbai: The Indian rupee fell to its lowest in more than three weeks on 24 April, weighed down by dollar buying by two large companies and foreign banks, dealers said.
At 9:46 a.m. (0416 GMT), the partially convertible rupee was at 40.110/120 per dollar, its lowest since 31 March, and 0.15% weaker than its close of 40.05/06 on 23 April.
“A couple of corporates are buying dollars and apart from that foreign banks are also doing the same on behalf of their foreign clients pressuring the rupee lower,” said a trader with a private bank.
“The RBI is not pushing it lower,” he said, referring to the Reserve Bank of India, which in recent weeks has intervened when the rupee has been rising.
The central bank bought $17.5 billion (Rs70,102 crore) in intervention in the first two months of 2008. It bought $74.9 billion last year.
“I expect the rupee to remain around 40.05 levels, but it remains to be seen whether we can cap it at 40.15 levels,” the trader said. “It’s going to be 40-plus for the day.”
The RBI reviews monetary policy on 29 April, and some analysts expect it to hike its lending rate to 8% to tame inflation that is running at three-year highs above 7%.
This would widen the interest rate differential between India and the United States, making investment in local assets more attractive.
India’s main share index opened 0.6% higher on 24 April. A buoyant stock market could attract more foreign buyers and increase capital flows, a key driver of the rupee.
Foreigners bought a net $360 million of local shares in the six sessions. But foreigners have sold a net $2.8 billion of stock so far this year. They bought a record $17.4 billion in 2007. ($1= Rs40.0585)