Mumbai: The Indian rupee pulled away from more than two-month lows on Tuesday as higher share prices raised expectations of more capital inflows, but lingering worries about euro zone’s debt problems checked the local currency’s gains.
At 1:55pm, the partially convertible rupee was at Rs45.5350/54 per dollar, after dropping to Rs45.6950 in early trade. It had closed at Rs45.62/63 on Monday after falling to Rs45.77 during trade, its weakest since 5 March.
The benchmark BSE share index was up about 0.5% recovering from intraday losses, mirroring a recovery in European markets.
The benchmark has dropped over 3.6% so far this month, with foreign funds pulling out around $665 million from Indian equities. Still, they have invested a net of about $5.9 billion so far in 2010, adding to a record $17.5 billion last year.
The euro was near a four-year low against the dollar as the euro zone’s debt problems and fiscal tightening by governments raised worries on regional growth.
One-month offshore non-deliverable forward contracts were quoted at Rs45.72, weaker than the onshore spot rate.
In the currency futures market, the m ost traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX were at Rs45.5425 and Rs45.54 respectively, with the total traded volume on the two exchanges at about $5.7 billion.