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Rupee drops on China talk after early rise

Rupee drops on China talk after early rise
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First Published: Fri, Aug 21 2009. 11 42 AM IST
Updated: Fri, Aug 21 2009. 11 42 AM IST
Mumbai: The Indian rupee gave up early gains on Friday and fell as increased talk China may tighten banks’ capital requirements weighed on regional units. A weak start to local shares also added to the pressure.
At 11:00am, the partially convertible rupee was at Rs48.81/82 per dollar, 0.2% below its Thursday’s close of Rs48.71/72. It had strengthened to as much as Rs48.63 in opening deals.
Madhusudan Somani, head of foreign trading at Yes Bank, said a news report that China was likely to tighten capital requirements for banks pushed Asian currencies lower, affecting the rupee too.
Sources said earlier this month that China’s banking regulator, concerned record lending could lead to a spike in bad loans, may tighten banks’ capital rules by excluding subordinated bonds they sell to other banks from their capital base.
A similar story was issued by Bloomberg news on Friday and re-focused attention towards the issue, dealers said.
“All Asian equities have come off a bit. The likely range for the rupee as of now is Rs48.65-48.90,” Somani said.
Local shares fell more than 1% in early trade, weighed down by muted Asian peers and uncertainty over the impact of weak monsoon rains on the domestic economy.
Dealers were also watching the dollar’s moves versus other major currencies for cues. The dollar index, a gauge of the US unit’s performance against majors, was up 0.2%.
One-month offshore non-deliverable forward rupee contracts were quoting at Rs48.88/98, 0.1% weaker than the onshore spot rate.
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First Published: Fri, Aug 21 2009. 11 42 AM IST
More Topics: Markets | India | Rupee | Dollar | Currency |