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Rupee inches up on stock cues

Rupee inches up on stock cues
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First Published: Fri, Mar 06 2009. 05 52 PM IST
Updated: Fri, Mar 06 2009. 05 52 PM IST
Mumbai: Rupee inched up on Friday as stronger shares bolstered hopes capital outflows may steady, but ended down 1% for the week in which it hit a record low as deepening global woes cast a pall over riskier assets.
Dealers said banks were also squaring positions ahead of twin market holidays next week and key US payroll data due later in the day.
The partially convertible rupee ended at Rs51.63/65 per dollar, 0.25% stronger than Thursday’s close of Rs51.76/78. On Tuesday, the rupee had dropped to an all-time low of Rs52.20.
It is down 5.7% so far in 2009.
“Markets were rangebound for most of the session and trading interest was thin after the volatility in recent days,” said R.A. Sankara Narayanan, head of currency trading at Bank of India.
Capital outflows have been a key driver of the rupee’s fall. Foreign investors have sold a net $2.1 billion of shares in 2009 after dumping more than $13 billion in 2008.
Credit Suisse said in a recent note foreign investors’ stock holdings were worth around $110 billion, a third of a $380 billion peak.
But it added that even in a worst case scenario, foreigners may take another $10-15 billion from the local market, beyond which additional outflows would be too small to count.
Many dealing rooms were thinly staffed with traders at a market seminar in the southern city of Kochi.
The dollar dropped more than 1% against a basket of currencies on Friday, reversing recent sharp gains as investors braced for data that is expected to show the US jobs market took a severe knock in February.
One-month offshore non-deliverable forward contracts were quoting at Rs51.99/52.09, weaker than the onshore closing rate.
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First Published: Fri, Mar 06 2009. 05 52 PM IST
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