C.J. Kurien / Reuters
Mumbai: The rupee lost ground on Monday, 6 August, on selling from overseas investors with a waning appetite for risk, though it was lifted off its lows by exporters who repatriated profits.
The rupee ended at 40.41/42 per dollar, slipping from the last close of 40.34/35, but recovering from an early low of 40.52. It hit a nine-year peak of 40.20 hit last month.
“Offshore investors tried to drive the rupee lower, but there are so many exporters looking to sell (dollars) when the rupee weakens a bit,” said a senior dealer with a foreign bank.
The rupee took early cues from fellow high-yielding Asian units such as the Indonesian rupiah and the Philippine peso, which fell on Monday as more signs of a weakness in global credit markets prompted investors to cut riskier assets.
Most analysts believe the volatility that has overshadowed emerging Asian currencies in recent weeks will persist amid worries about the fallout from the US subprime mortgage market.
The credit worries and downbeat US economic data also weighed on India’s benchmark share index, which fell 1.55% to its lowest close in a month on Monday.
Foreign buying of local stocks has helped rupee gain 9.5% against the dollar this year, making it Asia’s strongest currency. Foreign funds have sold a net $345 million of equities this month, after buying $4.4 billion in July, and some dealers fear that a reversal in investor sentiment will put significant pressure on the rupee.