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Rupee suffers worst weekly fall in eight weeks

Rupee suffers worst weekly fall in eight weeks
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First Published: Fri, Nov 18 2011. 06 15 PM IST

Updated: Fri, Nov 18 2011. 06 15 PM IST
Mumbai: The rupee lost 2.4% on the week, its biggest weekly slide in eight weeks, as weak local shares and demand for dollars continued to weigh, although corporate dollar sales pulled it off a 32-month low hit earlier on Friday.
The partially convertible rupee ended at 51.3350/3450 per dollar, 0.8% weaker than Thursday’s 50.9050/9150 close, after sliding to 51.41 -- a level last seen on 18 March, 2009.
“Unless some flows come to India, rupee’s woes will continue. Stability in the euro zone is essential for the rupee to recover, which looks remote in the short-term,” said Hari Chandramgathan, a foreign exchange dealer with Federal Bank.
World stocks fell on Friday, extending an overnight slide, with renewed pressure on Spanish bonds reflecting fears the euro zone’s debt crisis was spiralling out of control.
The euro was at $1.3520 at the close of rupee trade on Friday, higher than $1.3485 on Thursday. The index of the dollar index was at 77.970 points from 78.166 points.
“The all-time low of 52.20 is likely to be seen, but with every 10 to 20 paise depreciation, some resistance is expected,” said Ashish Barua, a senior forex dealer with IndusInd Bank.
Indian shares fell 0.6% on Friday, dragging the main index to its biggest weekly fall in nearly three-and-a-half months, as concerns about the European debt crisis compounded lingering worries over weak local growth and slow government decision making.
Demand for the greenback from importers including oil refiners also weighed on the Indian unit, traders said.
Oil is India’s biggest import item and oil refiners are the largest buyers in the local forex market.
However, dollar sales in the local market provided some respite and pulled the rupee from the day’s low.
“Exporters were seen selling dollars in the 51.35-51.40 range, which helped the rupee to recoup some of its losses,” a forex dealer at a state-run bank said.
Subir Gokarn, a deputy governor at the central bank said on Thursday, said the RBI would be careful about using foreign exchange reserves aggressively to protect depreciation of the rupee.
The central bank had sold $845 million in September, after following a hands-off approach for nine months, data released last Friday showed.
The one-month onshore forward premium was at 25.25 points from 29 points on Thursday, the three-month was at 59 points from 72.25 and the one-year was at 163.25 points from 189.75.
The one-month offshore non-deliverable forward contracts were quoted at 51.71, weaker than the on-shore spot rate.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange were at 51.4325, while those on the MCX-SX and the United Stock Exchange were both at 51.4300. The total volume was at $5.32 billion.
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First Published: Fri, Nov 18 2011. 06 15 PM IST
More Topics: Markets | Rupee | Currency | Asia | BSE |