Mumbai: Rupee dropped to its lowest in nearly a week on Thursday as a sharp fall in the local stock market highlighted risk aversion among investors and fuelled concerns of further fund outflows.
The partially convertible rupee closed at Rs49.03/04 per dollar, 0.4% weaker than Wednesday’s close of Rs48.85/86.
“The rupee weakened mainly because of the stocks today, but there was strong resistance for the dollar-rupee around Rs49.20, prompting exporters to sell dollars,” a senior dealer with a private bank said.
“If the stocks are okay tomorrow, then we could see the rupee rise towards Rs48.80,” he added.
Sensex fell 3.45% on Thursday to their lowest close in over a month as fresh bouts of risk aversion gripped world markets, while fraud-hit Satyam plummeted a third after investors hopes for a government bailout faded.
Foreign funds have already withdrawn a net $291 million from local equities this year, after pulling out more than $13 billion in 2008.
Data on Wednesday showed, the RBI sold $3.1 billion in intervention in November, taking total net sales to $11.1 billion in the first 11 months of 2008.
One-month offshore non-deliverable forward contracts were at Rs49.29/39 per dollar, weaker than the onshore spot rate.
“Given the prevailing uncertainty on the global front and its impact on external financing, we expect the INR to trade at Rs48.5 per dollar, with a range of +/- 2 rupees,” Rohini Malkani and Anushka Shah, economists at Citigroup, wrote in a recent note.