Rupee weakens as risk aversion rises

Rupee weakens as risk aversion rises
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First Published: Fri, Jan 23 2009. 06 48 PM IST
Updated: Fri, Jan 23 2009. 06 48 PM IST
Mumbai: The rupee fell on Friday as concerns of rising risk aversion among investors weighed on sentiment after local shares fell 1.6%, with a broad dollar rally against major currencies also weighing.
The partially convertible rupee closed at Rs49.27/29 per dollar, 0.3% weaker than its previous close of Rs49.13/16. The unit is down 1.2% so far in 2009.
“There was some demand due to the stock market sell-off, besides it is also a long weekend, so that also added to the pressure,” a senior dealer with a private bank said.
The main stock index fell to its lowest close in two months on Friday, hit by grim prospects for corporate earnings and fading hopes for a rate cut at next week’s RBI policy review. The index has fallen 10.1% in January.
Growing risk aversion among foreign investors, who have pulled out nearly $1 billion this month after withdrawing more than $13 billion in 2008, added to the gloomy outlook.
Dealers said the dollar’s strength against major currencies overseas also weighed on the local unit.
The euro fell to six-week lows against the dollar on Friday and the pound hit a 23-year trough versus the US unit as weak data and global economic concerns kept investors extremely wary of risk.
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First Published: Fri, Jan 23 2009. 06 48 PM IST
More Topics: Markets | India | Rupee | Dollar | Trade |