Mumbai: The rupee fell on Tuesday, 3 June, as a wobbly stock market raised concerns about more foreign portfolio outflows.
At 10am, the partially convertible rupee was at 42.530/545 per dollar, 0.3% weaker than its previous close of 42.40/41.
“Since yesterday afternoon there has been major demand for dollars from importers, and sentiment is negative because of losses in the stock market which is putting pressure on the rupee,” a dealer at a private bank said.
India’s main share index, the Sensex, opened down 1.3%, after falling 2.15% in the previous session. The benchmark shed 5% in May and is down more than 21% since the start of this year.
Foreign funds have sold more than $3.9 billion of Indian shares so far this year, knocking the rupee down nearly 7.4% since the beginning of January. In 2007, they had bought $17.4 billion and helped the rupee rise 12.3%.
Oil, India’s biggest import was trading above $127 a barrel, after touching a record $135 on 22 May.
“A level of 42.50 is crucial for the rupee and it should trade in a band of 42.45 to 42.60, through the rest of the day,” Paresh Nayar, chief dealer at Development Credit Bank, said.
On Monday, the rupee had risen as high as 42.15, a level last traded on 14 May, after the Reserve Bank of India said it would provide foreign exchange to oil companies.