The rupee weakened to a more than two week low on Wednesday afternoon dragged by dollar demand by a large corporate, while lacklustre shares bogged down by a Moody’s downgrade of the banking system, also added to the downward pressure.
At 02:25pm, the partially convertible rupee was at 49.84/85 per dollar after hitting 49.96, a level last seen on 24 October and 0.7% weaker than its previous close of 49.4750/4850.
The rupee is seen moving in a 49.39-49.95 range, with traders cautious ahead of a market holiday on Thursday.
The main stock index erased early gains and seesawed, with banks among the losers after Moody’s downgraded its outlook on Indian banking.
Moody’s Investor Service on Wednesday downgraded its outlook for India’s banking system to “negative” from “stable”, as it warned of slowing growth at home and overseas hitting asset quality, capitalization and profitability.
Traders said India’s rising trade deficit also hurt the rupee. Trade deficit in October is seen at $19.6 billion, the highest in four years, the trade secretary said on Tuesday, citing provisional data. At this rate, the trade deficit for the year could breach $150 billion, Rahul Khullar said.
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