Rupee eases on weak Asia, but losses capped

Rupee eases on weak Asia, but losses capped
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First Published: Mon, Dec 17 2007. 11 04 AM IST
Updated: Mon, Dec 17 2007. 11 04 AM IST
Reuters
Mumbai: The rupee eased slightly on Monday, 17 December, hurt by declines in most Asian currencies on waning prospects of further rate cuts by the US Federal Reserve, though dollar selling by a private-sector bank capped losses. At 9:45am, the partially convertible rupee was at 39.35/36 a dollar, just softer than the previous close of 39.34/35 on Friday, which was its strongest finish since 19 November.
The rupee hit a near-decade high of 39.16 last month.
“The negative cues from dollar-Asia and other equity markets are what people are looking at, but the rupee is not likely to be affected as much as other Asian currencies,” said the chief dealer with a foreign bank.
Asian shares fell on Monday after surging US inflation and high oil prices fanned concerns the Federal Reserve may be unable to make deeper cuts to prevent a possible recession.
Still, dealers said that elevated overnight interbank interest rates would limit the rupee’s losses, as banks may pare dollar holdings to tide over tight cash conditions.
Call rates were at 7.7-7.8%, higher than the 6% when cash conditions are normal.
Adding to the tentative mood were concerns India’s central bank would block any rapid appreciation in the rupee, which has gained over 12% this year.
The Reserve Bank of India (RBI) bought $64.5 billion in intervention in the first 10 months of the year.
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First Published: Mon, Dec 17 2007. 11 04 AM IST
More Topics: Markets | Rupee | dollar | US Federal Reserve | RBI |