Mumbai: The Indian rupee eased in early trade on Wednesday, tracking weak regional currencies, but a firm start to the domestic sharemarket is expected to arrest the fall and could push the local unit up later in the session.
At 10:30am, the partially convertible rupee was at Rs46.83/84 per dollar, a little below its previous close of Rs46.80/81. Last Thursday, the rupee fell to a low of Rs46.97, its weakest since 27 November.
So far the rupee has traded in a band of Rs46.8175 to Rs46.84. Most Asian units were weaker compared to the dollar.
Activity was thin ahead of year-end, with Monday being declared a holiday for the markets in addition to Friday.
“Gains in the stock market are getting offset by the dollar’s rise versus the euro, which is quite significantly down,” said Naveen Raghuvanshi, an associate vice president with Development Credit Bank.
“Had it been for the euro’s move alone, then the rupee should have crossed 47 by now. But it would continue to be in Rs46.75-46.87 range for the rest of the month. There is very little impetus for any movement and only in the New Year we could see some fresh triggers,” he added.
Shares rose 1% in morning deals, supported by gains in Asia, but they may lack further momentum for a sharper move.
“We may see the dollar-rupee drifting lower towards Rs46.75 tracking shares later today,” said R.K. Gurumurthy, head of treasury, at ING Vysya Bank.
The US dollar notched a two-month top on the yen in Asia on Wednesday, with buyers enticed by US yields at four-month highs and the steepest yield curve on record.
One-month offshore non-deliverable forward rupee contracts were quoted at 46.82/92, little changed from the onshore spot rate.
In the currency futures market, the most traded near-month contracts on the National Stock Exchange and MCX-SX were both quoting at Rs46.85 respectively, with the total traded volume on the two exchanges at about $400 million.