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Business News/ Opinion / Online-views/  Rupee drops on euro slump, weak local shares
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Rupee drops on euro slump, weak local shares

Rupee drops on euro slump, weak local shares

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Mumbai: The rupee fell on Monday for the sixth straight session and touched its lowest in more than a year, tracking local shares, as the deepening debt crisis in Europe hit the euro and prompted investors to sell riskier assets.

At 10:29 am, the partially convertible rupee was at 46.96/97 to a dollar, after dipping to 46.98 -- its weakest since 1 September 2010, and 0.9% weaker than Friday’s close of 46.56/57.

Traders said domestic exporters may be prompted to sell dollars after the rupee’s fall over the past few days and limit further weakness.

“It looks like we are in (a rupee) oversold territory and some stability should soon set in. Full focus of the market is now on the news emerging from Europe and movement in the euro," said a senior foreign exchange dealer at a private-sector bank.

The euro hit a six-month low against the US dollar and a 10-year trough versus the yen, falling below key technical levels and option barriers on worries that the euro zone’s support for Greece is wobbling and the country may be forced to default on its debt.

Group of Seven finance ministers agreed on Friday to respond in concert to a slowdown in the global economy but produced no concrete action to calm markets spooked by signs of faltering growth and Europe’s debt crisis.

The single currency was at $1.3515, sharply lower from $1.3807 when the rupee closed on Friday, while the index of the dollar against six major currencies was at 77.716 points from 76.614 points previously.

Weakness in most Asian currencies and the local benchmark share index, which fell as much as 1.8%, also weighed on the rupee, traders said.

The market will keep an eye on July industrial output data due at around 11:00 am for movements in the stock market, which in turn may affect the rupee.

Foreign funds have bought over $510 million of local shares so far in September after selling $2.2 billion last month.

The one-month onshore forward premium was 17.75 points from 18 points on Friday, the three-month was at 47 points from 49 and the one-year was at 133 points from 139.25.

One-month offshore non-deliverable forward contracts were quoted at 47.24, weaker than the onshore spot rate.

In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were all at 47.08. The total volume was $1.52 billion.

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Published: 12 Sep 2011, 11:30 AM IST
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