Mumbai: The Indian rupee edged lower on Wednesday, tracking choppy domestic shares as the last phase of voting got under way in national elections, and traders said they would be awaiting exit polls for direction.
At 10:35am, the partially convertible rupee was at Rs49.30/31 per dollar, off a low of Rs49.38, pulled up by the dollar’s weakness overseas. It had closed at Rs49.26/28 on Tuesday.
The dollar hit a four-month low against a basket of currencies and a seven-week trough versus the euro on Wednesday, facing renewed selling amid a recovery in risk appetite that has curbed safe-haven buying of dollars.
Traders said the stock market would be watched for clues on fund flows.
“Volatility will be there ahead of the election results, the exit polls this evening may provide some cues,” a senior dealer with a private bank said.
Indian shares dropped nearly 1% early after a higher start, as political uncertainty weighed.
Exit polls, which have been well off the mark in the past, will be released after the last round of voting in the month-long election ends around 5pm. Election results are due on Saturday.
Dealers said exports data failed to make any significant impact on the rupee in the midst of election uncertainties, but would cap any appreciation in the local unit, if stocks gain sharply later in the day.
India’s exports provisionally fell by a third in April to $10.7 billion from a year earlier and imports dropped 35%, the Economic Times reported.
One-month offshore non-deliverable forward contracts were quoting at Rs49.38/48, weaker than the onshore spot rate, indicating a slight bearishness about the rupee’s near-term prospects.