Indian rupee falls to 1 mth low on weaker stocks

Indian rupee falls to 1 mth low on weaker stocks
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First Published: Mon, Jun 22 2009. 06 13 PM IST
Updated: Mon, Jun 22 2009. 06 13 PM IST
Mumbai: The rupee fell to its lowest in a month on Monday, weakened by a fall in share prices and demand for dollars from importers as the US currency strengthened ahead of a policy meeting of the Federal Reserve.
The partially convertible rupee ended at Rs48.62/63 per dollar, off an intraday trough of Rs48.75, its lowest since 18 May, according to Thomson Reuters data. The rupee ended about 1.1% lower than Friday’s close of Rs48.09/10.
The local unit has shed more than 3% so far in June.
The main stock index fell 1.35% on Monday as investors continued to take gains after a three-month rally, with a weak start in European markets adding to the sell-off.
“Equities were the key trigger for the rupee to fall today,” a trader with a foreign bank said.
Foreign portfolio flows into stocks of of about $7.5 billion since mid-March have been a key driver for the rupee, but the fall in the stock market since 10 June has weakened support. “Import demand was more than other days this month. I guess they are covering ahead of the usual jump in dollar buying by refiners towards the month-end,” the trader said.
The dollar’s gains overseas also hit sentiment, traders said.
The dollar index, a gauge of the US unit’s performance versus majors, was up about 0.6% at 1120 GMT, ahead of the US Federal Reserve’s policy-setting meeting on Tuesday and Wednesday.
Markets expect the Fed to provide a slightly brighter economic view, and will be watching to see whether it will address a recent rise in Treasury bond yields.
One-month offshore non-deliverable forward contracts were quoting at Rs48.72/82, slightly weaker than the spot rate.
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First Published: Mon, Jun 22 2009. 06 13 PM IST
More Topics: Rupee | Dollar | Currency | US | Oil |