Mumbai: The rupee stayed weak in afternoon trade on Monday, dropping more than 1 percent against the dollar, as concerns European policymakers may not be able to solve the region’s debt crisis and prevent a default by Greece hit risk appetite, weighing on euro and shares.
The cancellation of a visit by Greek Prime Minister George Papandreou to the United States to chair an emergency cabinet meeting at home, and a regional election defeat for German Chancellor Angela Merkel, added to a sense of worsening crisis.
A Reuters poll of more than 50 economists last week gave a 65 percent chance of a Greek default.
At 1:45pm, the partially convertible rupee was at 47.80/81 per dollar, more than 1.1% weaker than Friday’s close of 47.26/27, and traders said unit could hit 47.90 during course of the week.
The local benchmark share index too fell over 1% due to risk off sentiment.
The euro was at $1.3662, down from $1.3811 at end of the rupee’s trade on Friday, while the index of the dollar against six major currencies was at 77.170 points from 76.550 previously.
Announcement at the end of the 2-day US Federal Reserve meeting starting Tuesday is expected to throw cues on trajectory of growth in the world’s largest economy and in turn the dollar’s direction, traders said.