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Business News/ Opinion / Online-views/  Rupee slips as rate cut expectations grow
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Rupee slips as rate cut expectations grow

Rupee slips as rate cut expectations grow

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Mumbai: The Indian rupee was unable on Friday to mount a recovery from its sharpest one-day fall in more than 12 years as it was weighed down by expectations of rate cuts and the stock market losing some of its early momentum.

A sharp fall in annual inflation to 8.98% in early November, its lowest since early May and well below market forecasts, has raised expectations of further cuts in interest rates, which could weaken support for the rupee.

At 10:36am, the partially convertible rupee was at Rs49.45/46 per dollar, more than a quarter of a percent down from Wednesday’s close of Rs49.30/32 per dollar, when it fell 2.4%, its biggest daily fall since February 1996.

The currency market was shut on Thursday for a holiday.

Stocks rose as much as 3% in early trade but had turned negative within the first hour despite strong gains elsewhere in Asia.

Foreign fund selling of shares has also been a key factor in the rupee’s weakness this year. They have so far sold a net $12.7 billion worth of shares after buying a record $17.4 billion last year.

The rupee hit a record low of Rs50.29 per dollar in late October. After gaining more than 12% against the dollar in 2007, it has fallen more than 20% this year.

One-month offshore non-deliverable forwards were quoting at Rs49.81/49.96 per dollar, weaker than the onshore rate.

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Published: 14 Nov 2008, 11:08 AM IST
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