Rupee edges up, falling stocks a concern

Rupee edges up, falling stocks a concern
Comment E-mail Print Share
First Published: Thu, Sep 03 2009. 05 23 PM IST
Updated: Thu, Sep 03 2009. 05 23 PM IST
Mumbai: The Indian rupee rose for a second day on Thursday as the dollar weakened versus other major currencies, but the move lacked conviction as a fourth straight fall in local shares fuelled concerns of capital outflows.
The partially convertible rupee closed at 48.92/93 per dollar, off an early high of 48.80 but still 0.1% stronger than its previous close 48.96/97. On Wednesday, the rupee had fallen to 49.21, its lowest since 13 July.
“The euro rose above 1.43/dollar which was supporting the rupee, but weakness in equities kept the rupee in a range,” said Naveen Raghuvanshi, an associate vice president with Development Credit Bank.
Indian shares fell 0.45%, taking their losses for the week to 3.3%, as uncertainty about the impact of weak monsoon rains on the economy and doubts about the sustainability of global recovery kept investors wary.
Moves in local stocks are a key influence on foreign portfolio inflows, which in turn affect the rupee. Foreign funds have bought a net $8.1 billion of local shares so far in 2009, after selling more than $13 billion last year.
“If the euro rises to about 1.44/dollar overnight, then the rupee is likely to open close to 48.75 tomorrow while weakness in the rupee beyond 49 looks unlikely for now, there seems to be good psychological and technical support around that mark,” Raghuvanshi said, but other dealers saw renewed losses.
“Our view is that the rupee has room to go up to 49.50 tracking the action in cross currencies, falling equities and inflationary expectations,” said V. Kumar, chief foreign exchange dealer with State Bank of Travancore.
The dollar index, a gauge of the US unit’s performance versus six majors, was down 0.4%.
The euro rose against the dollar and yen on Thursday ahead of a European Central Bank meeting where policy makers are seen leaving interest rates unchanged while upgrading their economic forecasts.
One-month offshore non-deliverable forward rupee contracts were quoting at 48.99/49.09, weaker than the onshore spot rate.
In the currency futures market, the most traded near-month contract on the National Stock Exchange and MCX-SX closed at at 48.97 and 48.9550 respectively, with the total traded volume on the two exchanges at about $1.6 billion.
Comment E-mail Print Share
First Published: Thu, Sep 03 2009. 05 23 PM IST
More Topics: Rupee | Dllar | Currency | Yen | Shares |