Rupee eases on fears of global risk reversal

Rupee eases on fears of global risk reversal
Comment E-mail Print Share
First Published: Fri, Jan 18 2008. 11 04 AM IST
Updated: Fri, Jan 18 2008. 11 04 AM IST
Mumbai: The rupee eased a touch on Friday as traders braced for overseas investors to start cutting their holdings in local assets as fears of a recession in the United States heightened global risk aversion.
At 10 pm (0430 GMT), the partially convertible rupee was at 39.310/315 per dollar, softer than Thursday’s 39.30/31, which was its lowest close since 8 January according to Reuters data. It struck a decade-high of 39.16 in November.
“Sentiment is a little shaky at the momement, but the flows are still there, ensuring that the rupee does not fall much,” said a dealer with a foreign bank.
India’s benchmark share index fell more than 1% in early deals on Friday, extending losses to a fifth straight session on falls in global markets.
Asian stocks tumbled on Friday after the latest salvo of sour signals from the US economy pummelled Wall Street, sending the benchmark S&P 500 3% lower.
US Federal Reserve Chairman Ben Bernanke told a congressional committee on Thursday that more interest rate cuts might be necessary because the economic outlook had weakened.
Bernanke’s bleak assesment was widely seen as a signal that the U.S. central bank would slash rates by a half-point after a meeting on 29-30 January.
Local dealers were mixed about the impact on the rupee of a Fed rate cut, with a section of the market anticipating it would boost capital flows into high-yielding Indian assets.
In 2007, foreign fund buying of a record $17.4 billion of stocks was a key driver for the rupee’s rise of more than 12%. Foreigners sold $565 million worth of shares on Wednesday, making them slight net sellers for the month.
Comment E-mail Print Share
First Published: Fri, Jan 18 2008. 11 04 AM IST
More Topics: Market | Rupee | Currency | Money | Dollar |