Mumbai: The Indian rupee fell to its lowest in nearly two weeks on Wednesday as the euro lost ground against the dollar on a bout of risk aversion while a decline in Asian stock markets raised concerns about the momentum of capital inflows.
The partially convertible rupee ended at 46.70/71 per dollar, off an intraday low of 46.74, its weakest since 29 July and about 0.6% weaker than Tuesday’s close of 46.3950/4050. This is the unit’s biggest single-day fall since July 19. “The euro coming down and the stock market slightly in the negative territory are risk aversion factors which are impacting the rupee,” said Paresh Nayar, head of foreign exchange and money markets at First Rand Bank in Mumbai.
The euro fell 2% on the day against the dollar. The US currency, however hit a 15-year low against the yen after the Fed’s measures to bolster the fragile economy.
The dollar index was up more than 1% against six majors at the time of the local market’s close.
The Fed on Tuesday took a small but significant step to counter a weakening US economic recovery, saying it would use cash from maturing mortgage bonds it holds to buy more government debt.
The benchmark BSE share index fell 0.8% in line with weak world markets. Foreign investors have bought $11.2 billion worth of shares so far in 2010, adding to last year’s record $17.5 billion inflows.
One-month offshore non-deliverable forward contracts were at 46.95, weaker than the onshore spot rate.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX ended at 46.82 on both exchanges, with the total traded volume on the two exchanges at a high $4.8 billion.