Mumbai: The rupee ended weaker on Wednesday, but was off a over three-week low touched earlier in the day, on concerns the eurozone debt crisis could spread after downgrades of Greece and Portugal’s credit ratings.
Indian shares tumbled 1.8%, after falling by nearly 0.3% on Tuesday, after credit ratings downgrade of Greece and Portugal depressed sentiment in financial markets and renewed concerns about the strength of the global economic recovery.
The partially convertible rupee ended at 44.64/65 per dollar, off a low of 44.7650, its lowest since 5 April and weaker than Tuesday’s close of 44.4350/4450. The rupee moved in a band of 44.5450-44.7650 in the day.
“I think market has bottomed out. There has been too much buying (of dollars). The rupee should open stronger tomorrow (on Thursday),” said a dealer at state-run Union Bank of India in Mumbai.
Dollar sale by a large corporate at 44.71/72 level pulled the rupee back from lows, dealers said.
Traders said they were awaiting the US Federal Reserve’s rate decision for cues on the central bank’s outlook on growth and inflation. The two-day meeting of the US Fed’s rate setting committee will end on Wednesday and the decision is expected at 1815 GMT. The dollar remained strong against major currencies globally after the euro hit a one-year low against the greenback following the ratings downgrade of Greece and Portugal. Lack of clarity on the extent of aid Greece may receive and whether that would be enough, kept the euro under pressure.
The index of the dollar against six major currencies was up 0.13% and dealers said they would watch the dollar’s moves for further direction on Thursday.
“Purely on technicals the rupee should appreciate tomorrow. But nothing can be said before Fed statement comes,” said a dealer at a private bank in Mumbai.
One-month offshore non-deliverable forward contracts ended at 44.72/82, weaker than the onshore spot rate, suggesting overseas investors were bearish.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange ended at 44.5950 and on MCX-SX at 44.5975, with the total traded volume on the two exchanges at about $8.4 billion.