Mumbai: The rupee ended slightly weaker on Thursday, surrendering early gains as the stock market turned negative and as importers bought dollars to meet month-end commitments.
The partially convertible rupee ended a choppy session at Rs48.595/605 per dollar, just below its previous close of Rs48.56/57. From an early high of Rs48.46, the rupee fell as far as Rs48.73. On Tuesday, it had hit Rs48.90, its lowest since mid-May.
“The month-end demand is also picking up. But stocks remain the main trigger,” a senior dealer with a foreign bank, said.
The Bombay Stock Exchange 30-share index Sensex, which had risen as much as 1.1% in morning trade, ended down 0.5% after a below-normal monsoon forecast triggered concerns demand in the crucial rural heartland would take a hit.
Monsoon rains, a lifeline for India’s economy, are expected to be below normal for the first time in four years, the government said on Wednesday.
The rupee has rebounded from a record low of Rs52.2 in early March as foreign investors bought around $7.5 billion of stocks in three months as the BSE benchmark rose more the 90%.
But foreign investors have sold about $500 million of stock since mid-June as the share market has come of its highs, raising worries that the earlier inflows may not be sustained.
Traders said importers, specially refiners were also aggressively buying dollars. Oil, India’s biggest import, traded above $69 a barrel. A rise in global oil prices means more dollars are needed to pay for imports and also raises concerns of a widening trade deficit.