Mumbai: The rupee eased on Friday, 24 August, as traders focused on the fallout of turbulence in the US housing and credit markets, which put pressure on Asian share indices, as well as the ongoing domestic political standoff.
At 9:40am (0410 GMT), the rupee was at 41.09/10 per dollar, slipping from Thursday’s 41.04/06, when it bounced in a 40.7750-41.20 range. It hit a nine-year high of 40.20 last month, but has since weakened amid waning risk appetite for emerging market assets.
“Caution is prevailing at the moment, lots of people are sitting on the sidelines and waiting to see how things unfold,” said a senior dealer with a private bank.
Asian stocks fell on concerns that the turmoil in US credit and housing markets could push the world’s largest economy into recession, with investors fretting about the impact of slowdown in Asia’s largest export market.
Local dealers were wary that India’s benchmark stock index would follow the lead of other Asian indices, spurring foreign funds to trim their holdings in Asia’s third-largest economy.
Further, concerns over the impact of an impasse between the government and its communist allies weighed on the local unit.
The communist parties have asked the government not to go ahead with negotiations with the International Atomic Energy Agency next month to conclude a key safeguards agreement until all its concerns over the nuclear deal with the United States are addressed. To see story, double-click
Traders fear the uncertainty could spur foreign investors to withdraw funds, which would put pressure on the rupee.