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Rupee weakens to 3-week low on lower equities

Rupee weakens to 3-week low on lower equities
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First Published: Wed, Oct 28 2009. 06 40 PM IST
Updated: Wed, Oct 28 2009. 06 40 PM IST
Mumbai: The rupee fell to a three-week low on Wednesday, pressured by shares falling for the third straight day and customary month-end dollar demand from refiners.
The partially convertible rupee ended at 47.34/35 per dollar, off a low of 47.38, its weakest since 5 October and almost 1% weaker than its previous close of 46.88/90.
“There was oil related buying in the market. A strong dollar overseas and the stock market’s fall also contributed the fall of the rupee,” said a senior dealer with a foreign bank.
Indian shares extended losses for the third straight day, and eased 0.4% to their lowest close in over six weeks, as most banks fell after the central bank asked them to raise the provision cover for bad debts.
In its policy review on Tuesday, the Reserve Bank of India (RBI) left key interest rates unchanged but surprised markets by removing emergency liquidity support measures that were implemented to protect the economy from the global downturn.
Foreign portfolio inflows are a key driver of the rupee. Foreign investors have bought a net $14.4 billion of local equities so far this year, after being sellers of more than $13 billion in 2008.
Traders said dollar buying by refiners also weighed on sentiment. Oil, which hit a one-year high of $82 a barrel last week is India’s largest import and refiners are the biggest buyers of dollars in the local market.
The dollar index, a gauge of its performance against major currencies, was up 0.1%.
One-month offshore non-deliverable forward contracts were quoting at 47.43/53, weaker than the onshore spot rate.
In currency futures, the near-month contracts traded at 47.45 and 47.4625 on National Stock Exchange and MCX-SX respectively.
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First Published: Wed, Oct 28 2009. 06 40 PM IST
More Topics: Rupee | Currency | Dollar | Foreign Exchange | Markets |